It is relatively a new concept introduced by Reserve Bank of India to encourage financial inclusion. These banks majorly facilitate online transactions and are known to provide the services at ease. The most known companies for Payment Banking are Airtel Payments Bank and PayTM. Payment Banks can be used as current and savings accounts. You can also avail ATM and Debit cards through this channel. Payment Banks can also offer Mutual Funds and Insurance policies.
There are as many as 11 companies approved by RBI for payment banking but only 2 of them are currently functional. Three among 11 companies have already withdrawn their licenses and the other companies are yet to finalize their plans. Below are the 11 companies which are licensed Payment Banks:
- Airtel Payments Bank (Functional)
- PayTM (Functional)
- India Post Payments Bank
- Vodafone M-Pesa
- Reliance Industries
- National Securities Depository Limited
- Sun Pharma ( Withdrawn License)
- Aditya Birla Nuvo ( Withdrawn License)
- Fino Paytech
- Cholamandalam Distribution Services ( Withdrawn License)
- Tech Mahindra
Airtel Payments Bank : Airtel has become the first ever Payment Bank to start its operations. It offers the interest rate higher than the traditional banks. See this also ups invoice.
PayTM: It is a widely known Payment Bank with its coverage spread across different cadres of the society. Its partnership with various service providers like Uber and RedBus has given it an edge over its competitors.
India Post Payments Bank: It comes with a slogan “Aapka bank, aapke dwaar ” and is trying to stay in the competition with its investment and savings oriented schemes.
Vodafone M-Pesa: M-Pesa is available to make any Vodafone purchases and is also a business correspondent for ICICI bank.
Reliance Industries (Jio Payments Bank): It is a joint venture of Reliance Industries and State Bank of India and it may swing the market after complete integration of JIO services.
National Securities Depository Limited, Fino Paytech, Tech Mahindra: These companies have not yet started their operations and are still in planning process to introduce their respective brands. However, some of them have already partnered with other banks to offer services at scale.
Sun Pharma, Aditya Birla Nuvo and Cholamandalam have withdrawn their licenses citing different reasons.
How does Payment Banking help me?
- Easier to make digital purchases
- Your phone becomes your bank
- Less hassle of cash handling
- For now, Airtel Payments bank pays more interest rate than the normal bank.
Are there any limitations with Payment Banking?
- Payment Banking does not issue a credit card or a Loan.
- They may charge for transacting over their platforms.
- Deposit Limitations.