Question

Which of the following type of financial institutions cannot issue loans to its customers?

• A. Scheduled Banks
• B. Rural Regional banks
• C. Cooperative Banks
• D. Payment banks

Answer 1

The correct option is D Payment banks

Scope of activities of Payment Banks
Payment banks can accept demand deposits. This implies that customers can open savings accounts as well as current accounts; but NO time deposits (such as FDs).
An account balance cannot exceed Rs. 1 Lakh for an individual customer. Payment Banks can issue ATM/ debit cards but not credit cards.
Payment Banks can NOT give loans.
Payments and remittance services through various channels.
A payment bank can become Banking Correspondent of another bank and offer all products / services which a BC can offer.
Payment Banks can distribute non-risk sharing financial products like mutual fund units and insurance products, etc.
The revenue of these banks would come mainly from the transaction fees.