What are payments banks?

The payments banks are referred to as the “Differentiated Banks” by commercial banks. Reserve Bank of India in its guidelines, has started setting up payments’ banks in the country from November 24, 2014. The Payments Banks will try to meet the needs of the public though with some restrictions like the banks will be authorized to open current and savings accounts but, it won’t be able to issue credit cards to its customers.

Objectives of Payments Banks

According to the reports of the Reserve Bank of India, almost 60% of the people in the country are not connected to the banking sector. These include the lower-class groups who do not have much idea about banks or live in rural areas of the country. The main objectives of Payments Banks are to provide financial inclusion by providing payments to migrate the labor workforce, opening accounts of small business holders and workers of the unorganized sector. Some of the objectives are listed as under:

No monthly account maintenance

In the case of most payments’ banks, there is no requirement of minimum balance. Customers can opt for zero balance accounts. However, in the case of Airtel Payments Bank, a minimum of Rs. 100 is required.

Offers

There are so many offers provided by these payments’ banks. Airtel Payments Banks offer high rates of interest, free talk time, and also Paytm Payments provide cashback to its customers on deposit of Rs. 25,000 and free banking services.

Deposit up to Rs. 1 lakh

Payments Banks offer deposits of Rs. 1 lakh limits. The limit cannot be extended at any cost. The amounts can be deposited in parts or in full. The limit has been set to protect the interests of the customers.

Interest on savings

The interest rates differ from banks to banks and the minimum rate of RBI is 4% simple interest rate. Airtel Payments Banks provide higher interest rates of 7% and India Post Payments Banks provide 5.5 % while the Paytm Payments Banks provide interest rates at 4%.

Virtual and physical debit cards

Payments Banks provide both virtual and debit cards. The best thing about debit cards is that they can be used in all ATMs of the country as well as abroad. The physical debit cards have an annual fee charged for its uses. The virtual charges have no charges.

Digital

These banks are providing chances of using banks without a physical visit. They come with features like debit cards and checkbooks, but transactions can be carried out online without the need to go to any physical outlet. It helps in promoting the Government’s dream of Digital India. These banks are accessible on phones so you need not worry about anything.

Online fund transfers

Customers can avail of the facilities of NEFT, IMPS, etc. Online transfer of money is the desired mode of transfer in Payments Banks. They also provide online free transactions to people.

Also Read: Top 10 Private Sector Banks in India by RBI