---
title: "Payments Bank: RBI Differentiated Licence | Model Diplomat"
description: "A Payments Bank is an RBI-licensed bank that accepts capped deposits and offers remittances, making it essential for financial inclusion in India."
url: "https://modeldiplomat.com/learn/glossary/payments-bank"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- A payments bank is a differentiated bank licensed by the Reserve Bank of India that accepts deposits up to a capped limit and offers remittances but cannot lend or issue credit cards.
- What is the maximum deposit a payments bank can accept per customer?
- Why can't a payments bank give loans?
- How does a payments bank differ from a small finance bank?
- Which were the first payments banks to launch in India?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

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## Timeline

1. 27 November 2014

   The RBI issued final Guidelines for Licensing of Payments Banks on under Section 22 of the Banking Regulation Act, 1949, read with the Reserve Bank of India…

2. 19 August 2015

   In its in-principle approvals announced on , the RBI cleared eleven applicants.

3. 1 September 2018

   Several surrendered their licences, but a set of operational entities emerged: Airtel Payments Bank, which launched commercially in January 2017 as India's f…

4. 31 January 2024

   The most consequential supervisory action came on , when the RBI directed Paytm Payments Bank Limited to stop accepting fresh deposits, top-ups and credit tr…

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Example

In January 2024, the Reserve Bank of India ordered Paytm Payments Bank to stop accepting fresh deposits and credit transactions after a cut-off date, citing persistent supervisory and KYC non-compliance.

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