Country's largest commercial banking entity State Bank of India (SBI) is now developing a low-cost model to compete with payments banks.
"We are working out on a low-cost structure to compete with the payments banks for getting access to people living in the remote areas", SBI chairman Arundhati Bhattacharya said today.
Bhattacharya said that the only advantage which the payments banks would have over other banks is that they would be able to get access to remote parts of the country.
"There will be payments banks associate sitting in every second home in a village as their operational costs are lower compared to normal banks", she said at a FICCI meet here.
To counter that, SBI would be opening customer service points (CSPs) in unbanked panchayats and also train youth with minimum education so that they are able to operate a mobile phone, printer and a scanner.
Bhattacharya said that the mobile wallet which SBI had recently launched, Buddy, would also work within the realm of a payments bank.
The biggest disadvantage which the payments banks would have is that they would not be able to give loans as they do not have any history of the credit profile of their customers.
"These payments banks are only for small remittances and cannot give any loans", she said.
"History of credit is very important", she added.