The establishment of ‘Payment Banks’ is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context? 1. Mobile telephone companies and supermarket chains that are owned and controlled, by residents are eligible to be promoters of Payment Banks. 2. Payment Banks can issue both credit cards and debit cards. 3. Payment Banks cannot undertake lending activities. Select the correct answer using the codes given below:

The correct answer is B (1 and 3 only). Payment Banks were licensed under RBI's 2014 guidelines to take deposits of up to Rs 1 lakh per account and to offer payments and remittance services, which is why they are built for financial inclusion rather than full banking.

• Statement 1 is correct. The guidelines allow residents' companies with a sound track record, including mobile telephone companies, supermarket chains, non-banking finance companies, and real-estate and PSU entities, to promote a Payment Bank. The promoter must hold a majority stake, with a minimum initial capital requirement.
• Statement 2 is wrong. Payment Banks can issue debit cards and prepaid instruments, but not credit cards, because they cannot lend.
• Statement 3 is correct. Payment Banks cannot lend or issue loans of any kind. Their balance sheet is restricted mainly to deposits and government securities.

The concept links to the syllabus on financial inclusion, the Jan Dhan-Aadhaar-Mobile trinity, and the role of RBI's differentiated licensing. For Mains, a useful angle is why a bank without a lending book may still widen access to the formal financial system.

Trap: Many aspirants assume that any bank can issue both debit and credit cards. Payment Banks issue debit cards only, because credit cards require lending.