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 code given below.

The correct answer is option B (statements 1 and 3 only).

Statement 1 is correct as mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks[2].

Statement 2 is incorrect. Payment Banks cannot issue credit cards but can issue debit cards[4]. They can issue ATM/Debit Cards for payments and remittance services[1].

Statement 3 is correct. Payment Banks cannot give depositor's money as loans[4], meaning they are not allowed to lend[5]. This restriction ensures they focus on their primary objective of providing low-cost payment and remittance services to promote financial inclusion among migrant laborers, self-employed individuals, and low-income households.

Therefore, only statements 1 and 3 are correct, making option B the right answer.

1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
2. [2] https://ijirt.org/publishedpaper/IJIRT168218_PAPER.pdf
3. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 191
4. [4] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 191
5. [5] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 21. Payment Banks: > p. 87