KBC Money Ltd. intends to obtain the license from the Reserve Bank of India for operating as a Payment Bank. The company approaches you to seek your advice on the key issues requiring compliance by an applicant company.

Payment Banks are regulated by the Reserve Bank of India (RBI). It released Guidelines for Licensing of Payment Banks on November 27, 2014 and Operating Guidelines for Payment Banks on October 6, 2016. An application has to be filed with Reserve Bank of India in Form III under Section 22 of the Banking Regulation Act, 1949 for a licence to commence banking business by a company incorporated in India and desiring to commence banking business. Key issues which require compliance by an applicant company are summarized below: Compliance with the minimum capital requirement Foreign shareholding will be allowed in these banks as per the Rules/Regulations for Foreign Direct Investment in private banks in India. Compliance with the voting rights as per the Banking Regulation Act, 1949. The majority of the bank's board of directors should consist of independent directors, appointed according to RBI guidelines. The bank should be fully networked from the beginning. The bank can accept utility bills. It cannot form subsidiaries to undertake non-banking activities. Initially, the deposits will be capped at ₹ 200,000 per customer, but it may be raised by the RBI based on the performance of the bank. The bank cannot undertake lending activities. 25% of its branches must be in the unbanked rural area. The bank must use the term "payments bank" in its name to differentiate it from other types of bank. The banks will be licensed as payments banks under Section 22 of the Banking Regulation Act, 1949. It will be registered as public limited company under the Companies Act, 2013. Accordingly, KBC Money Ltd. is advised.