PAYMENTS BANKS’ ROLE IN DIGITAL FINANCIAL INCLUSION IN INDIA: OPPORTUNITIES AND CHALLENGE
Drive for “digital financial inclusion” has been a key policy factor in India for the last decade. Payments Bank is one of the recent most important strategy factors to fulfill this objective. This paper briefly discusses the structure and functions of payments banks as conceptualized and implemented. The primary goal of payments bank was enhancing the range of digital financial inclusion by leveraging the user friendly app-based financial service platform to provide effective services in a more accessible form for low-income households and small business firms. This study attempts to understand the expectations of the policy makers regarding the role of these new financial entities and their opportunities and challenges. In the last few years after their introduction, payments banks have not been able to perform satisfactorily in the profitability front probably due to their huge initial infrastructural costs. However, it is expected that in the years ahead, payments banks are going to play a larger role in achieving financial inclusion in India. In this paper, we have discussed the performance of the payments banks in the last few years and the opportunities and challenges they are likely to face in the future years.