Economics • Banking & FinanceHard
What is the primary structural characteristic of 'Payment Banks' permitted to operate in India?
A. They are authorized to extend long-term infrastructure loans and issue corporate credit cards
B. They can accept restricted deposits up to specified limits but cannot undertake lending or issue credit cards✓ Correct Answer
C. They operate exclusively as international trade settlement institutions for multinational corporations
D. They function as cooperative credit unions owned entirely by agricultural producers
💡 Solution & Explanation
Payment banks are specialized financial institutions that can accept restricted retail deposits up to statutory limits and provide remittance services, but they are strictly prohibited from lending or issuing credit cards. Corporate loan extensions remain the domain of universal commercial banks. Cooperative credit societies cater to agrarian communities rather than operating as national payment entities. Financial inclusion initiatives heavily leverage payment bank models to reach unbanked rural populations.
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