The Reserve Bank of India has permitted banks without ATM network to issue debit cards in tie-up with a bank that has its own network as it pushes for cashless transactions.
Co-operative banks will also be allowed to issue debit cards with a bigger bank as a sponsor.
"As a precursor to moving towards a less-cash economy, it is necessary to inculcate the habit of using electronic payment channels among bank customers," the central bank said in a notification.
"With this in view, it has been decided to permit co-operative banks which are CBS enabled, to issue ATM cards/ ATM-cum-debit cards in tie-up with a sponsor bank."
RBI has also mandated guidelines to become sub-member of the National Financial Switch (NFS) for carrying out such transactions.
NFS, a mechanism developed by National Payments Corporation of India, enables money transfers, direct payments, account balance checking and so on.
"The matter has been examined keeping in view the requirement to become a direct member or a sub-member of the National Financial Switch (NFS) for carrying out such transactions," RBI said.
Banks need to be core banking solution (CBS) enabled along a lincence for conduction banking business. They should also be connected with NPCI for operation.