"We are seeing a lot of competition," SBI chairperson Arundhati Bhattacharya said at a FICCI Banking Conclave here.

She said that while full-fledged or universal banks were ahead of payments banks (PBs) in terms of service, size of remittance handled and other factors, the PBs would be ahead of the universal banks when it came to their reach in rural households.

"PBs will have better access in the rural unbanked segment and so we are also coming up with a low-cost model to service the unbanked segment," she said.

According to her, setting up a bank in a rural place involved numerous costs while the cost could be pared down through the CSP route. Bhattacharya said the PBs would handle small remittances and reach out to rural customers, these financial institutions would be of limited help to regular customers.

"The PBs are also not interested in credit history as they cannot offer loans. It makes more sense to use full-fledged banks to build the credit history," she said.

The SBI chairperson referred to the importance of the credit history in developed countries."In the developed world, without a credit card, you don't exist. Without it, you can't do a thing," Bhattacharya said.

In West Bengal, the SBI would add 500 CSPs in rural panchayats which don't have access to banking facilities.

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