The Reserve Bank of India (RBI) established Payments Banks to ensure financial inclusion by offering payments and remittance services to a population with little or no access to banking. People and small companies in underserved areas can go to these Payments Banks in India and open savings and current accounts.
Concept of Payment Banks in India
The Reserve Bank of India (RBI) has envisioned a new bank type in India called Payment Banks. These banks will not only aid India’s underserved populations but will also give them simple financing alternatives to satisfy their needs. This article will provide you with a list of Payment Banks in India. In India, digital payment banks can make payments on behalf of businesses and individuals. As a result, one may argue that Payments Banks in India have a bright future! Airtel Payment Bank was the first payment bank to be created.
In terms of features and services, these banks are not like traditional banks. India’s payment banks are unable to offer loans or credit cards. They can, however, issue ATM/debit cards. They can also provide services such as internet banking and mobile banking.
Establishment of Payments Banks in India by RBI
Under the Guidelines for Licensing of Payments Banks announced on November 27, 2014, the Reserve Bank of India decided to provide “in-principle” approval to 11 applicants seeking to establish payment banks. The RBI has compiled a list of payment banks in India.
Important Features of Payment Banks in India
Some of the important features of Payment Banks are discussed below:
- A deposit limit of up to Rs 1 lakh rupees is available at Payments Bank. Banks should not exceed the limit at any moment. They are able to accept demand deposits, such as current and savings bank deposits.
- Demand deposits and bank deposits are available to individuals, small businesses, and other organizations.
- Payment banks also provide debit card services as well as electronic money transfer services such as ECS, NEFT, and RTGS.
- They have the ability to make utility bill payments on behalf of consumers as well as the general public.
- These payment banks provide access to mobile banking.
Main Aim of Payment Banks in India
- Payments banks in India were established with the goal of ensuring that all segments of society have equitable access to the financial services provided by the banks.
- Payment banks prioritize inclusion, whether it’s delivering payments or financial aid to migratory workers or opening savings accounts for small enterprises.
- According to Reserve Bank of India figures, almost 60% of the Indian population is not connected to any banks and receives no financial support. As a result, Payment Banks were established to bridge the gap between the various parts of the country.
Difference between Payment Banks and Other Banks
- By including the word “payments” in their titles, they set themselves separate from the other banks in our country.
- In India, there are six payment banks dedicated solely to assisting the underprivileged.
- Payment banks must always follow the Reserve Bank of India’s basic standards, even if they become a business agent of another bank.
- These banks can form partnerships with other commercial banks to offer pension plans and other comparable products, with authorization from the Reserve Bank of India.
- Payment banks in India, like any other bank, would be required to deposit a specific amount with the Regional Bank of India as a Cash Reserve Ratio.
Payment Banks Not Permitted to Engage in Activities
- Recurring and fixed deposits(time deposits)are not permitted to be opened by payment banks.
- Payment banks are prohibited from engaging in any lending activities.
- They are not permitted to accept deposits from non-resident Indians.
- Cash transactions are now limited to Rs 100,000 per customer.
Benefits of Payment Banks
Following are the benefits of Payments Banks in India:
- Rural banking and financial inclusion are being expanded.
- The formal financial system is expanding.
- Alternative to commercial banks that is effective.
- Deals with low-value, high-volume transactions efficiently.
- Access to a wide range of services.
List of Payments Banks Operating in India
In India, the following payment banks are currently operational.
- Airtel Payments Bank Ltd
- India Post Payments Bank Ltd
- Fino Payments Bank Ltd
- Paytm Payments Bank Ltd
- Jio Payments Bank Ltd
- NSDL Payments Bank Limited
Airtel Payments Bank Ltd
In January 2017, Bharti Airtel, India’s largest telecom provider, launched Airtel Payment Bank to help the Indian government’s promised cashless revolution. It was created to help the government’s Project Digital India effort, which aims to make the economy more open and cashless. Bharti Airtel, India’s largest telecom provider, launched Airtel Payment Bank in January 2017. Airtel Payments Bank Limited is one of India’s leading payment banks. At any of their 5 lakh+ banking locations, you can open a savings account. With a free personal accident insurance cover of Rs.1 lakh, you can earn 3% interest. You will receive an online debit card and will be able to deposit cash at any nearby Banking Point. Click here to go to the Official Website of this Bank.
India Post Payments Bank Limited
On September 1, 2018, the India Post Payments Bank was established to provide a full range of financial services. India Post is the backer and operator of this bank. Over 1.36 lakh India post offices have been enabled by IPPB, with over 1.13 lakh in rural India. The IPPB provides doorstep banking and financial services to the poorest members of society. To provide doorstep banking services, postmen and GraminDakSevaks have been given cellphones and biometric devices.
IPPB’s network stretches across the country, with more than 3 lakh people on the job every day. With IPPB, you can open a zero-balance savings account. By December 2020, India Post Payments Bank Limited had attracted approximately 4.0 crore users.
Fino Payments Bank Ltd
Fino Payment Bank, which was established on April 4, 2017, has simplified the entire banking process for ordinary people. They provide services in about 25000 banking locations in 28 Indian states and around 500 districts. The Fino Payment Bank Savings account includes a number of benefits. If you have a Fino Payment Bank account, you may be assured that it is in good hands. Nearly the years, the bank has reached out to and influenced the lives of over 100 million customers.
Paytm Payments Bank Ltd
In India, who hasn’t heard of Paytm? Since the Digital India Campaign, the brand has grown tremendously. Paytm is now used by practically every smartphone user for financial transactions.
Paytm’s payment bank is another innovation, with each consumer receiving a unique passcode. This one-of-a-kind code assures that their money is safe in the Paytm bank. What’s even better? There are no account opening fees or minimum balance requirements when you open a savings account with Paytm Payments Bank. You can keep up to Rs.2 lakh in deposits and benefit from a number of advantages. It allows you to earn 2.75 percent per year on your deposits, which are paid monthly.
The Paytm app makes account opening straightforward and fully digital. However, you must submit documents to complete your KYC at a nearby Paytm location or during a ride because Paytm has partnered with Ola and Uber to complete KYC through their drivers.
Jio Payments Bank Ltd
Jio has to be the one brand that pops up in every advertisement. It has a phenomenal level of monogamy over the market. Reliance Industries Limited ownsJio Payments Bank. Enjoy banking services via your phone app or in one of their locations. You can start a savings account in a matter of minutes without having to fill out any paperwork. Furthermore, there is no obligation for a minimum balance in this account.
The Reserve Bank of India gave Reliance Industries Limited “in-principle” approval to establish its Payment Bank in 2016. Jio Payments Bank first opened its doors in 2018.
NSDL Payments Bank Limited
NSDL jiffy is the face of NSDL Payments Bank, and it was launched in October 2018. It is one of India’s leading payment banks, offering faster and easier transactions.
Overall, it simply improves one’s banking experience. NSDL Payments Bank’s mission is to provide seamless banking services to all Indians, whether they are underserved or wealthy.
How is New Airtel Payments Bank Different from the Airtel Money Wallet?
The new Airtel Payments Bank differs from the existing Airtel Money wallet in that it is more than simply a wallet, allowing you to transact more easily with other banks and paying interest on the money you deposit, something that the Airtel Money wallet could not do. Airtel Money users will be able to transfer their amount from their wallets to their Airtel Payments bank accounts.
What the Requirements for Opening a Payment Bank?
The most important requirement for establishing a payment bank is a minimum paid-up capital of Rs 100 crores. The venture’s operational promoters must own at least 40% of the company, with the first five years guaranteed. The new FDI strategy will govern the bank’s overseas holdings.
Obstacles to Overcome
- Lack of public information about how to use these services.
- There aren’t enough incentives for agents to participate in these activities.
- Infrastructure and operational resources are lacking.
- Obstacles of technology