Payment Banks In India

Payment Banks In India


Recently the Paytm Bank was launched and now four payments banks are operating in India which are – Paytm Payment Bank, Airtel Payment Bank, India Post Payments Bank and FINO Payment Bank.

With Digitalization on its top gear, Banking and all other kind of financial services has made its presence in the digital space which is growing day by day and thus Payment Banks have become a part of this initiative.   What are the special features of a Payment Bank?

  • The payments bank is like normal banks.
  • They perform almost all banking operation but do not provide any credit facility, even on a small scale as is done by any other normal bank.


1. Interest rates:

The standard interest rate on deposits paid by commercial banks range from 3.5 – 6%.  Asondate,  Airtel payments bank is giving the highest interest rate of 7.25% which is quite attractive as compared to other commercial banks. Paytm’s bank offers an interest rate of 4% on savings account and 7% on FDs whereas, India Post payments bank is offering between 4.5 – 5.5% for savings account.  Some other small scale commercial banks such as RBL  bank offers interest rate of 7% and Yes bank offers interest rate of 6.25%.  However, these depend on the deposit amount.

In terms of RBI guidelines, payments banks cannot lend but can only accept deposits or accept payments. Banking experts believe by offering higher interest rates on deposits competition in this sector would rise.

2.  Minimum Balance:

Non maintenance of minimum balance attracts penalty, in most of the banks.  However, among Payment Banks,  Paytm payments bank came up with zero balance account where no minimum balance needs to be maintained that even without any charge. Few banks and digital banking system has also come up with this however, several banks charge the minimum balance charges.

3. Charges:

In the normal course, certain fee is levied, for online transactions by banks.  Also Payment banks levy such charges. The charges levied by Payment Banks are

  • For online transfers, India Post payments bank charges Rs. 5 for IMPS and NEFT is free of cost. For online transfers within the bank Airtel payments bank doesn’t charge anything otherwise it charges 0.5% of the transferred amount.
  • For every online transaction Paytm payments bank is not charging anything, all fund transfer services like IMPS, NEFT and UPI online transactions are free of cost.
  • Different payments banks charges differently for cash withdrawals.  Paytm payments bank follows the standard RBI rules of cash withdrawal charges similar to all other commercial banks in India. For the same, Airtel payments bank charges 0.65% of the withdrawal amount; India Post payments bank doesn’t charge any fee for withdrawals made from their own ATM or any Punjab National Bank’s ATM if not it too follows the same RBI rules.

4. Process:

Opening of an account with a Payment Bank is made easy when compared to other banks:

  • Open these accounts, instantly, through their respective mobile apps just by providing details like Aadhar number with KYC verification.
  • Offering of Debit Card is free at India Post payments bank. Also the annual maintenance fee is only Rs. 100 that too from second year.

Paytm payments bank is also offering free digital debit card with an annual subscription charge of Rs.100 for the physical card.  Also it provides its customers Cheque books for Rs. 100.

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