The payments bank proposed to be allowed by Reserve Bank of India will hurt existing "universal" banks as they will offer products which are cross-subsidizing other services. She also said that there would be an element of regulatory arbitrage as a payment bank would invest only be investing in government bonds.
Speaking at a conference on banking and financial service organized by SBI Capital Markes, Bhattacharya said, "There is an element of cross-subsidy in services provided by a bank. The payments bank will not have to provide the cross-subsidy. We will have to find ways to work with that."
In terms of what has been proposed for by the Nachiket Mor committee on financial inclusion payment banks will provide largely transaction services. At present regular banks do not charge for a host of services, however they recover their costs through the spread they earn over funds lying in savings account.