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In order to extend the banking services to the sector that doesn’t use banks for their financial needs, the Reserve Bank of India encouraged the idea of Payment Banks. In this direction, the RBI gave ‘in principle-approvals to 11 companies to establish payment banks in India. This approval is only for a stipulated time, after which if the entity fails to establish the bank, the ‘in-principle approval’ would be revoked.

What are Payment Banks?

Payment Banks are almost similar to traditional banks. The only difference is that they can offer only certain banking services. To promote more and more digital transactions, the RBI had recently doubled the bank deposit limit, i.e, from ₹1 lakh to ₹2 lakh. Some of the popular payment banks are Airtel Payments Bank, Paytm Payments Bank, India Post Payments Bank and Fino Payments Bank.

Payments Bank vs Traditional Banks

Payment banks are offering interest rates as high as 7.5%. Also, most of the payment banks have the facility of zero balance account. One of the major differences between payment banks and traditional banks is that payment banks are not authorized to lend money. Loan facility is only available with traditional banks. Also, there is no bank deposit limit in traditional bank accounts.

Savings account in a traditional bank gives the interest rate around 5%-6.5%. And in case, the customer has a zero balance account with the bank, the interest rates can go down to 3%. For example, SBI provides an interest rate of only 2.70%, HDFC gives 3-3.5% on the savings account, India Post Office 4% and Yes Bank around 5%.

Let’s take a look at different Payment Banks in the country:

Airtel Payments Bank

-It provides an interest rate of 2.5% p.a on your savings account.

-The customer also gets a free virtual debit card.

-Maintaining a minimum balance in the savings account is not required.

-Airtel Payments Bank provides a range of other services as well like mobile recharge, DTH recharge, online shopping, FASTag etc.

Fino Payments Bank

-If you have a savings account in this bank, you can get the interest rate of 2.75% p.a. If the customer has opted for a sweep account facility, the interest can go as high as 7.25%.

-Interest on balances in sweep account opened with Partner Bank – Up to Rs 1 Lakh – 4% p.a., over Rs 1
lakh and up to Rs 10 Lakh – 6.25% p.a. and above Rs 10 Lakh – 6% p.a

-The customer gets free Rupay debit cards.

-Maintaining a minimum balance in the savings account is not required.

-Accidental Insurance/Permanent disability cover of up to ₹ 2 Lakh.

Paytm Payments Bank

-It provides an interest rate of 2.75% on a savings account. The interest rates can go as high as 7% if the customer is using a fixed deposit facility.

-Deposits up to ₹1 lakh are accepted.

-It provides a plethora of other financial services like mutual funds, loan repayments, insurance, etc.

-Maintaining a minimum balance in the savings account is not required.

-Range of other services like online shopping, recharge, movie tickets, train tickets, flight tickets, etc.

India Post Payments Bank

-Interest at the rate of 2.75% p.a is offered on the savings account.

-Maintaining a minimum balance in the savings account is not required.

-Facility of zero balance account.

-Free monthly e-statements.