Why in the news ?

• The Centre would now allow small finance banks and payment banks to offer the Atal Pension Yojana (APY), which is expected to significantly increase the coverage of the scheme.

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• The step is taken to strengthen the existing channels of APY distribution, it is felt that these new payments banks and small finance banks will provide a boost to the outreach of subscribers under AP.
• So far, 11 payment banks and 10 small finance banks have received licences from the Reserve Bank of India to start banking operations in India.
• In order to familiarise these small finance banks and payment banks with APY, the Pension Fund Regulatory and Development Authority (PFRDA) conducted an orientation meeting in New Delhi.
• All small finance banks and payment banks have positively responded to the initiative undertaken by PFRDA and have committed towards the greater cause of building a pensioned India.
• As per the Official data, there were more than 84 lakh subscribers registered under the APY with an asset base of more than Rs 3,194 crore up to January 2018.

Atal Pension Yojana (APY)

• Atal Pension Yojana (APY), is a pension scheme for unorganised sector workers which was launched in June 2015 by the government.
• This social security scheme was introduced as a replacement to previous government's Swavalamban Yojana.

• The Atal Pension Yojana is administered by the PFRDA (Pension Fund Regulatory and Development Authority) under the National Pension System (NPS).
• Eligibility :

1. An Indian citizen
2. Have a valid bank account
3. Are between 18 and 40 years of age. 

• APY is a periodic contribution based pension plan and promises a fixed pension of Rs 1000/ Rs 2000/ Rs 3000/ Rs 4000 or Rs 5000. The pension amount depends on the monthly premium.
• The scheme also promises a co-contribution by Central Government of 50% of the total prescribed contribution by a worker, up to Rs. 1000 per annum, but only to those who joined APY before 31.12.2015. 
• The co-contribution by government would be made only for 5 years .

Payment banks

• A payments bank is like any other bank, but operating on a smaller scale without involving any credit risk.
• In other words, it can carry out most banking operations but can't advance loans or issue credit cards.
• It can accept demand deposits (up to Rs 1 lakh), offer remittance services, mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking and third party fund transfers.
• The main objective of payments bank is to widen the spread of payment and financial services to small business, low-income households, migrant labour workforce in secured technology-driven environment.
• With payments banks, RBI seeks to increase the penetration level of financial services to the remote areas of the country.

Source

The Hindu, Economic Times.