India’s first Payments bank - Everything you need to know!

India’s first Payments bank - Everything you need to know!

Digitalization has been the clear stratum of Modi government ever since it began its reign and payments bank are just a step leap in the same direction. There are eleven other entities that have been in the list for license for payments bank but are yet to make things official.

It should be noted that payments bank is the brainchild of former governor Raghuram Rajan who stressed upon the need of differentiated bank license.

What is payments bank?

Payments banks are a new model of banks conceptualized by RBI in 2013 and is expected at this time of distress to help people live cashless.

These banks can accept a restricted deposit which is currently limited to INR 1 lakh per customer account.

These banks cannot issue loans and credit cards. Both current account and savings accounts can be operated by such banks.

Payments banks can issue services like ATM cards, debit cards online banking and mobile banking. Airtel has launched India's first live payments bank.

Airtel Payments bank

Airtel has taken the big lead to become the first ever payments bank in India to go live. Airtel Payments Bank+ has rolled out its pilot project in Rajasthan. Airtel has promised to be a disruptor, going way ahead of conventional banks to offer 7.25% interest on savings bank accounts. All other banks offer interest at around 4% only.

Airtel had earlier launched a mobile wallet, Airtel money, which allowed easy transfer and paying options. Airtel has entered into a pact with Kotak Banks, which agreed to acquire a 20% stake in the bank.

At the inauguration, Airtel promised to be fully committed to the government’s vision of financial inclusion and banking for all. They are in their pilot and would be testing operational readiness for full-scale launch across the country.

How to open an account with Airtel Payments Bank?

1. You will need an Aadhaar card for opening a savings bank account at Airtel Payments Bank. Even if you aren’t an Airtel subscriber, you can have an account with your Aadhaar card.

2. You will need to visit a designated Airtel retail outlet in your area with your Aadaar card. The account opening procedure will be paperless.

3. Within a few minutes, you will have a savings bank account with the help of electronic know-your-customer process.

Making transactions

1. You will have the facility to deposit or withdraw cash at any designated Airtel retail outlet. These outlets will be called Airtel banking points.

2. Customer’s mobile number will be their Airtel account number.

3. There is going to be no ATM/debit/credit card facility for account holders in the beginning but later on Airtel might start working on that.

4. For checking account balance or transaction details you can use Airtel Money App, USSD or IVR service over your mobile phone.

5. Transferring fund to family or friend will also be done with Airtel Money App that is user friendly and fuss free. Additionally, you can also do so through USSD by dialing *400#.

6. No service charges will apply on transfer of money from one Airtel number to another.

What are they meant for?

1. Small savings account could be maintained with Airtel Payments Bank.

2. It will also be ideal for remittance services.

3. Low income households will benefit largely from this service.

4. Small businesses will find it in their favor to have accounts with Airtel banking.

5. Every account holder will get a personal accident insurance of Rs 1 lakh.

6. People who are not able to handle banking and internet banking services will find it beneficial in the current time of cash distress.

7. Local merchants and sellers will be relieved to accept digital payments without having PoS facility.

Since Airtel Payments Bank is only the beginning, we can expect more entities to start providing these facilities in times to come. There are other service providers in wait to get the complete license but are missing some necessities like PayTm was supposed to be the first to launch but might be following later on. Cash crunch is a difficult time, especially for poor people and such services can be a good rescuer to them.