Calcutta, Aug. 21: Commercial banks will leverage on their strengths and address their weaknesses to compete with the newly licensed payments banks.

SBI chairperson Arundhati Bhattacharya today said accounts with commercial banks will give individuals access to credit. Moreover, they are expanding through a franchisee model of business correspondents.

"As long as you (a customer) operate with the payments bank, your credit history will not be built. So, while you may use the payments bank for small-value remittances, it makes sense to use a full-fledged bank to build your credit history," Bhattacharya said at a Ficci event.

The SBI chief's comments comes a day after RBI governor Raghuram Rajan said payments banks would not pose any major threat to existing lenders and rather serve as "feeders" for the universal banks.

The RBI has given "in-principle" approval to 11 entities, including the Department of Post, Reliance Industries, Aditya Birla Nuvo, Vodafone and Airtel. Incidentally, the SBI has partnered Reliance in its payments bank venture.

Payments bank licence will allow collection of deposits (up to Rs 1 lakh per individual), Internet banking, money transfers and sale of insurance and mutual funds. They can issue ATM/debit cards, but not credit cards and also cannot lend.

The cost of the operation of payments banks will be significantly lower than the universal banks, giving them better access. "If the payments banks are going to recruit people in a village, it is possible that they can have a much cheaper structure. Our cost is much higher," she said.

"We are also coming up with a low-cost model. There will be a lot of competition. So the only winner is the customer," Bhattacharya said.

Bengal's finance minister Amit Mitra, who was also at the event, urged the bankers to improve the credit deposit ratio of the state from 67.52 per cent.