In 2015, the Reserve Bank of India, shared approval to brands like Reliance Industries, Aditya Birla Nuvo, Tech Mahindra, Airtel and Vodafone to start Payment Banks. Now, two years later, Payment Banks are in vogue with several opening right on your mobile smartphone.
What can Payment Banks offer?
- They function on minimum balance
- Allows you to make transfers, receive money right on your mobile
- Issue debit cards and ATM withdrawals
- Offer interest on your money
Who are some of the main players?
Airtel Payments Bank was the first to start last November and was followed by India Post Payments Bank and Paytm Payments Bank. Airtel aims to convert at least 100 million of their current customers to become users of their payments bank while India Post has plans to open over 500 branches by September. E-wallet Paytm’s payment bank has launched and is currently a by-invite only service.
These payment banks were licensed by the RBI to approach first time account holders and bring a technological revolution to the field of banking. But there are also certain established players like Singapore’s DBS & Kotak bank who have launched mobile only or digital bank accounts namely digibank & Kotak811 respectively. Of the two, digibank seems to have more functions and offers, so I will compare it with the Payment banks.
|digibank||PayTM Payments Bank||Airtel Payments bank||India Post Payments|
|7% Interest rate||4% Interest rate||7.25% Interest rate||5.5% Interest rate|
|No limit||Max balance of Rs.1 Lakh||Max balance of Rs.1 Lakh||Max balance of Rs.1 Lakh|
|Free Visa debit card, with PayWave||RuPay debit card free for 1st year||No physical debit card||Physical debit card free for 1st year. Annual fee Rs.100 from 2nd year|
|Free unlimited ATM
|Three free ATM withdrawals in metros after which it is Rs. 20/withdrawal. In non-metros, they offer 5 free withdrawals, then a charge of Rs.5 in non metros||0.65% charge per withdrawal.||Three free withdrawals, after which it is Rs. 20/withdrawal. In non-metros, they offer 5 free withdrawals. then a charge of Rs.8 in non metros|
Apart from these obvious advantages, digibank also offers a virtual assistant, expense tracker and allows you to enable/ disable debit card instantly the from the app. Another great feature is that you can create and link goal based recurring deposits from the app. The hidden charges and other limitations restricts payment banks from providing facilities like a full-fledged banks.
With the drive to make India digital and move away from a cash based economy, payment banks will play a large role in ensuring that first time account holders are attracted to the simplicity of opening an account. But, rather than go for a payment bank with a max limit of 1 lakh, we would suggest that they try a fully serviced bank account like digibank. It takes just 90 seconds to open and you can complete your eKYC with Aadhaar and bio metric verification very easily.