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All about Payments Banks

Payment banks are a new model of banks regulated by the Reserve Bank of India (RBI). They aim to promote financial inclusion. These payment banks are similar to traditional banks but come with certain limitations.

As many banks work out from physical branches, banks have yet not been able to reach every nook and corner of the country. Payment banks can help to fill the gap. According to RBI, 25% of its branches must be in the unbanked rural area. The account opening process is also available at Aadhaar-enabled payment system (AePS).

You can deposit money up to Rs 1 lakh in payment banks account. Payment banks have a tie-up with various commercial banks to offer ATM transactions facility to you and other customers. Some payment banks offer 5 free transactions monthly in non-metro cities. After this, you will be charged Rs 20 for cash withdrawal and Rs. 8 for non-financial transactions like balance enquiry.

Some payment banks offer you the RuPay debit cards so that you can easily withdraw money when you need it. You can also withdraw money, using cheque books offered by payment banks.

How to open a payments bank account

Step 1: Download the latest version of the respective payments bank’s mobile application or log on to their website.
Step 2: Enter and confirm your unique passcode. Choose if you wish to add a nominee now, or later.
Step 3: Submit your KYC documents and account opens within few minutes.

Here are some of the popular payment banks:

Airtel Payments Bank

Airtel payments bank was the first live payments bank in the country. Recently, the payments bank has launched Bharosa Savings Account. It allows customers to withdraw cash, check their balance and access a mini statement of their account. The service is available across 6.50 lakh Aadhaar-enabled payment system (AePS) enabled outlets. Customers can also receive government subsidies.

India Post Payments Bank

India Post Payments Bank was launched in the country with more than 600 banking points. The bank comes under Department of Post and Ministry of Communication. All the 1.55 lakh post offices in the country are linked to the IPPB system. It offers a range of products like a savings account, current accounts, money transfer and DBT transfer. The bank does not offer a debit card instead a user is provided with a QR code biometric card. The bank has strategically tied up with PNB Metlife and Bajaj Allianz to provide a one stop shop for financial services.

Fino Payments Bank

Fino Payments Bank comes with around 10 years of experience. Customers can open both savings account as well as a current account. There are more than 25000 touchpoints, 410 bank branches and several doorstep bankers. A complimentary insurance cover for accidental death or permanent disability is available with Fino Payments Bank debit card.

Drawbacks of a payments bank account

  1. No credit:
    Reserve bank of India has not permitted any of the payments banks to lend money. Despite being loyal or a creditworthy customer you won’t be allowed to use any overdraft or loan facility.
  2. Not an exact substitute to traditional banks:
    Payments bank cannot lend to its customers like traditional banks. They issue debit cards only and aren’t permitted to issue credit cards. Also, unlike traditional banks, you can keep a limited sum in a payment bank account, currently capped at Rs 1 lakh per account.

Conclusion

There is no doubt that payments bank operates on state of the art framework that is fairly advanced and complex than what commercial banks operate on. Transactions on a payments bank platform are protected by two-factor authentication which makes it quite robust. Payments bank were primarily incorporated to cater to underbanked areas. Still, there are certain services like lending and credit card facility which is not provided by payments bank which differentiates it from commercial banks.

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