Payments banks are predicted to change our country’s poor banking system in coming days. As majority of payments bank license, approved by Reserve Bank of India are directly or indirectly related to Telecom industries, it can be assumed that India’s telecom industry can be a partner in changing the banking landscape, or banking system can be revamped by telecom majors-owned, stripped down version of conventional banks, which are in turn known as Payments Bank.
As per RBI norms, Payments banks have to focus on providing basic financial services, including social security and utility bill payments, remittance functions and can mobilise deposits of up to Rs 1 lakh. Payments banks differ from traditional banks, as they don’t offer any credit card or loans.
Also, you can keep maximum of 1 lakh rupees in the payments bank account. Experts believe payments banks are not a replacement of traditional banks, but they can be the bridge between people without banking facilities and digital banking system, paving a way towards Digital India.
Payments banks will be better than the e-wallet systems (Citrus Pay, Ezetap, Freecharge, Mobikwik, Citi MasterPass, Ola Money, Jio Money, HDFC PayZapp, ICICI Pockets, JusPay Safe, PayUMoney, LIME, MoneyonMobile, MomoeXpress, Mswipe, Oxigen, PayMate, State Bank Buddy, Vodafone M-Pesa, mRupee, ItzCash etc) which almost offers the same except interest, ATM cards and some other facilities like pure banking services like ATM usage, chequebook use etc. Interestingly e-wallet business got an escalation after demonetization (banning of old Rs 500 and 1000 rupees notes), though many think digital wallet business model is not viable.
In 2015 RBI has approved 11 companies to operate payments bank in India. They are Aditya Birla Nuvo, Airtel M Commerce Services, Cholamandalam Distribution Services (Chola), Department of Posts, FINO PayTech, National Securities Depository, Reliance Industries, consortium of Sun Pharmaceuticals-IDFC Bank-Telenor Financial Services, Paytm, Tech Mahindra, Vodafone M-Pesa.
Post that three companies already dropped their ambitions to launch payments bank – Chola, Telenor-Sun Pharma-IDFC Bank and Tech Mahindra. The reason for dropping by Telenor consortium was simple, Telenor which is a pioneer in mobile banking in developing countries is on the verge of leaving India, and later Telenor’s telecom assets were acquired by Airtel. It has been heard that Vodafone may also drop their license as Vodafone will merge with Idea Cellular, and the combined entity will offer payments bank under one license, and therefore Birla’s payments bank has been delayed.
India has its first payments bank on November 23, 2016, when Airtel has launched its payments bank on a pilot basis. On January 30, 2017, India Post had started their own, and Paytm Payments Bank started invite based payments bank.
We just made a comparison table of three payments bank which has been launched so far. The facts can be changed as the companies change their terms and conditions.
|Airtel Payments Bank||India Post Payments Bank||Paytm Payments Bank|
|Owned by||Bharti Airtel and Kotak Mahindra Bank||Department of Post, Government of India. Punjab National Bank (PNB) is a partner in the venture.||One97 Communications, funded by SoftBank Group, Alibaba Group, Ant Financial Services Group, Ratan Tata|
|Launched on||Nov 23, 2016 – first payment bank in India||January 30, 2017||May 23, 2017|
|How to open account||Anyone with an Aadhaar card and a mobile number (e-KYC will help to open account in seconds)||Anybody with proper ID proof
There are 3 types of accounts : Safal, the regular account; Sugam, a basic savings bank deposit account (BSBDA); and Saral, BSBDA-Small.
|Initially it’s invites only|
|Minimum balance||Rs 10||Nil*||Nil|
|Maximum balance limit||1 lakh||1 lakh||1 Lakh|
|Interest rate||7.25%||5.5%||4%, payable monthly|
|Transaction charges||Cash withdrawal – 0.65% of the amount
Within Airtel Payments Bank (Internet banking, Mobile App & USSD) and to another Bank (Internet banking, Mobile App & USSD) – up to & including Rs 1,000 – FREE
From Airtel Payments Bank to another Bank (Internet banking, Mobile App & USSD) – for amounts > Rs 1,000 – 0.5% of amount transferred **
|Branch banking: 4 free transaction, after that Rs 20 per transaction
ATM transaction: free at India Post, PNB ATMs; other ATMs: 3 free for metros, 5 free for non-metros. After that Rs 20 for each transaction
Online fund transfer: Rs 2.5 – 5 for NEFT, IMPS at bank branch #
|IMPS, UPI, RuPay transactions and NEFT payments : FREE
Balance check, Mini statement: Rs. 5/txn
|Debit card, Cheque book and||No ATM card or Cheque book as of now. Here your Airtel mobile no becomes the account no.**||# more details below||Free Virtual Debit card
Rupay Debit card: Free + Rs 100 for annual subscription + delivery charge
Lost card replacement : Rs. 100 + delivery charges
Cheque book (10 leaves) Rs. 100 + delivery charges
|Others||IPPB will sell mutual funds, insurance schemes by 2018.|
From the table below you can see that Airtel offers the highest interest but charges on every transaction and there is no ATM card also. While India Post’s payments bank is offering more mature services – ATM cards and banking points with 5.5% interest (which is more than the interest of most of the regular bank’s saving account). And Paytm is just a new entrant – hardly we can comment on them. However as other companies will launch their pBanks and the whole ecosystem will turn more mature – it can herald a new age of banking in India.