Payment banks are primarily based on the new business model proposed by the Reserve Bank of India. These banks can basically offer all services offered by normal banks and financial institutions. Financial transactions like loans, credit cards, etc. are important for a regular bank visitor.
Digital Payment – Different Modes & Benefits
Digital payment banks can open both current and savings account for you., the only difference being the virtual touch-point. These payment banks can do it all just like regular banks, e.g. debit/credit cards, net banking, mobile operated transactions and more. The India Post Payments Bank was launched by the Government of India. It has not only turned popular but also guarantees 4% interest on savings account.
This bank has widely opened in the country with about 650 districts and 3250 access points. The Government promised to have nearly 1.55 lac post offices linked to the online portal for easy digital transactions and they also converted this to reality. After this discussion, you may think why it is relevant talking about post offices, when the argument started with banks. In that sense, post offices are trying to digitize as much as possible with their online payments. You may be forced to think that payment banks are too technology driven, and difficult.
Gradually payment banks are establishing with time and leaving a good impression. The introduction of India Post Payments is nothing new. In the recent years, several payment banks have been launched and stayed for something unique. Companies like Airtel, Paytm, Jio, Aditya Birla, etc. have come up with an edge in the market.
What is meant by Payment Banks?
Do you understand a payments bank? Let’s see how it really operates: A good payments bank permits you to carry on all banking transactions like cash withdrawal, deposit, allowing loans, sanctioning insurance. All this can be easily operated using a mobile handset.
Reserve Bank of India’s Viewpoint The effort of RBI goes long back in time with its digitization in the banking processes. Payments bank in India showed marvelous results in its quarter performance and marked the beginning for several digital endeavors. This has been made possible with the under consumption statistics of the banking sector. It’s surprising to see such a large proportion not using banking services.
The idea proposed has enabled quick banking for individuals who do not have access for years. The Reserve Bank of India has also worked it out with the perspective to provide additional facilities to people. In-fact, the overall percentage of engagement has risen drastically.
Payment banks v/s Regular banks
Payment banks v/s Regular banks- A comparative How do regular banks differ from payment banks? One can deposit money upto 1 lac under a payments bank category however, it is limitless for a regular bank. Let’s see it as under: Credit cards and instant personal loans can be positioned differently by the payment banks. Debit cards are allowed under both categories however credit cards and loans are not. This is only doable if the concerned bank ties up with the regular bank.
- Payments banks can be started with a minimum capital of 100 crores and with 40% of their total capital. Regular banks require larger capital, amounting to at-least 500 crores for improved scale and operations.
- Opening an account in a regular bank is tedious however making it online has another level of convenience.
- Many regular banks need you to have at-least a minimum balance in your account. Whereas in a payments bank, no minimum balance is required. Any balance according to your potential is admitted. These are fully zero balance accounts, and owing to their digital nature, no changes are admissible.
- Interest rate: Payments bank has a higher rate of interest compared to regular banks. Payments bank offer nearly 4% returns on the account whereas regular banks have it generally lower.
Eventually RBI will allow higher number of payment banks for better financial inclusion and management.
