Reserve Bank of India (RBI) has officially included NSDL Payments Bank Limited in the Second Schedule of the Reserve Bank of India Act, 1934, granting it the status of a ‘Scheduled Bank’. This development paves the way for NSDL Payments Bank to operate like a regular bank and roll out a unique 3-in-1 account (bank account + demat account + trading account) in collaboration with non-bank backed broking firms.
Key Highlights
- Promoter: NSDL Payments Bank is promoted by National Securities Depository Ltd (NSDL) – India’s largest securities depository.
- Strategic Aim: Position itself as a “Capital Market Bank” with a one-stop 3-in-1 account offering.
- Collaborations: Will partner with non-bank backed broking firms like Groww, Zerodha, Angel One, Motilal Oswal, 5paisa, IIFL, etc.
- Advantage: Enables such brokers to offer seamless 3-in-1 accounts, previously available only through bank-backed brokers.
- Operational Benefit: The majority of broking firms are already NSDL depository participants, making account linking faster and smoother.
- Innovation in Payments: Plans to introduce ASBA-like mechanisms for secondary market transactions (fund blocking instead of upfront debits) to improve liquidity and reduce settlement risks.
- Investor Base: Parent NSDL serves over 4 crore demat accounts in India, strengthening trust and reach.
Significance
- For Capital Markets: Creates a reliable financial bridge between investors, brokers, and banks, enhancing market efficiency.
- For Non-Bank Brokers: Eliminates dependence on bank-backed competition; speeds up client onboarding and KYC.
- For Investors: Provides a single integrated platform for banking and investing, improving convenience and reducing delays.
- For the Financial System: Strengthens interconnectedness between payment systems and capital market infrastructure.
Key Facts
NSDL (National Securities Depository Ltd):
- Established: 1996
- Headquarters: Mumbai, Maharashtra
- First depository in India to store securities in dematerialised form.
- Regulated by: SEBI (Securities and Exchange Board of India)
Payments Bank:
- Concept introduced by RBI in 2014 (Nachiket Mor Committee recommendation).
- Can accept deposits (up to ₹2 lakh per customer), issue debit cards, but cannot issue loans or credit cards.
Scheduled Bank:
- Defined under Second Schedule of the RBI Act, 1934.
- Eligible for RBI liquidity support, participation in clearinghouse, and access to interbank borrowing facilities
ASBA (Application Supported by Blocked Amount):
- Introduced by SEBI for IPO applications.
- Funds remain blocked in the applicant’s account until allotment, ensuring safety and liquidity.