The Cellular Operators Association of India (COAI) has suggested certain modifications in clauses mentioned in the draft guidelines for payments banks. The Reserve Bank of India (RBI) has recently released its draft guidelines for payments banks which allow select non-banking entities, including telecom operators, to provide limited banking functions.

COAI has requested RBI to allow the fully owned subsidiaries of operators to function as payments banks. The association is of the view that such a decision would allow the telecom operators to operate on a low-cost model, while contributing towards financial inclusion.

COAI has also asked for changes in the clauses on promoter equity, foreign equity and rural branches in the draft guidelines which would make the model of payments banks complex and expensive for telecom operators. According to the draft guidelines on payments banks by RBI, atleast 40 per cent of the paid up capital must be held by the promoter, locked in for five years from the date of commencement of business and to be brought down to 26 per cent within 12 years.

On the other hand, the COAI wants allowance of 100 per cent foreign shareholding for payments banks to permit telecom operators with high levels of foreign direct investment (FDI) to acquire a payments bank licence. In addition, it has asked the RBI to relax the clause of ring fencing of the financial and non-financial services of the promoters.