The Reserve Bank of India has doubled the maximum end of day balance for payments banks to Rs 2 lakh, a move that is set to help increase financial inclusion at a time when the coronavirus pandemic has adversely impacted migrant workers, low-income households, small businesses and other unorganised groups.

The RBI’s decision to enhance the limit of maximum balance was based on a review of the performance of these payments banks with a view to encourage their efforts for financial inclusion.

Payments banks will also be able to expand their ability to cater to the needs of their customers, including MSMEs, small traders and merchants.

The RBI has thus decided to limit of maximum balance at end of the day from Rs 1 lakh to Rs 2 lakh per individual customer. A circular in this regard shall be issued separately.

The regulator’s decision will address the growing banking needs of account holders of payments banks.

Payments banks can offer deposit services but cannot issue loans or credit cards to the customers. They can operate both current as well as savings account. The account holders can also get access to other services like ATM cards, fund transfers, bill payments, recharges and net banking. However, no non-resident Indian (NRI) deposits are allowed in the payments deposits.

Some of the popular payments banks include Paytm Payments Bank, Airtel Payments Bank and India Post Payments Bank.

The RBI also announced on Wednesday that it will make it mandatory for prepaid payment instruments (PPIs) like wallets interoperable. Users will be able to transfer money from one wallet to another or from a wallet to your bank account using the centralised payments systems, after doing a full-KYC (know your customer).

While announcing the first review of the RBI policy for the current financial year, RBI Governor Shaktikanta Das said PPIs were given the option to become interoperable in 2018 in cases where a full KYC is done.

“Despite the passage of two years, migration towards full-KYC PPIs, and therefore interoperability, is not significant. It is, therefore, proposed to make interoperability mandatory for full-KYC PPIs and for all acceptance infrastructure,” Das said.