A payment Bank is similar to other banks but operates at a smaller scale. These are eligible to carry out most of the banking operations except forwarding loans and issuing credit cards. There is also an upper limit on demand deposits with payment bank which is 1 lakh rupees i.e. money deposited in a payment bank account cannot exceed more than 1 lakh rupees at a given point of time.

Payment banks are set up to increase financial inclusion further by providing small saving accounts and remittance services to migrant labour workforce, low-income households, small businesses, other unorganised sectors and to other users. RBI has issued licences to start payment banks after the recommendations of Dr Nachiket Mor committee of RBI.

Activities carried out by Payment Banks

  • Acceptance of demand deposit up to 1 lakh rupees per customer. It can be increased by RBI.
  • Issuance of ATM or Debit cards while payment banks can’t issue credit cards.
  • Can act as a Banking Correspondent agent for any other commercial bank.
  • Provides payment and remittance services.
  • Not eligible to forward loans.
  • Distribution of non-risk sharing financial products like mutual funds and insurance products etc.
  • Payments Bank maintains a minimum 75% of deposits in Government bonds and a maximum 25% deposits with other scheduled commercial banks.
  • The promoter’s minimum initial contribution to the paid-up equity capital of such payments bank shall at least be 40 per cent for the first five years from the commencement of its business.

Indian Post Payment Bank

Indian post payment bank is Payment bank under the Department of Post with 100 per cent government equity. It was launched by Prime Minister on September 1, 2018, with 650 branches and 3250 access points all over India. Indian post payment bank has tied up with Punjab National Bank to provide the loan to its customers while to provide insurance services, it has tied up with Bajaj Allianz life insurance.

While Payment banks accounts cannot have more than 1 lakh rupee per customer at any point of time, Indian post will use post office saving accounts to hold the money which is surplus than the limit of 1 lakh. All the 1.55 lakh post offices of the postal department will be linked with Indian post payment bank by the end of 2018.

Payments Bank

What is QR card?

The QR (Quick Response) Card issued by the Indian post payment will be used for authentication purpose. This card will come with a QR code on it and for every customer, it will be unique. Now, a customer will not be required to remember PIN codes and passwords to use this QR Card, instead, biometric authentication will be there for double layer authentication purpose.

Let’s understand it with an example. I have an account with the Indian post payment bank and I want to withdraw some money from the post office or it may be postman who will come at home to provide service (doorstep banking services in the rural area will come at a cost of 25 rupees per cash transaction). I give him my QR card, he will scan it with its handheld machine and the first level of authentication is done. Now, he will ask for biometric verification (thumb impression) and this is the second step of authentication. After doing two level of the authentication transaction will be done.

List of Payments Bank with their Headquarter, CEO & Tagline

RBI had issued licenses to 11 entities to start operations as payments bank. However, currently, just 6 entities have started operations. These are mentioned as:

(1). Airtel Payments Bank

  • Headquarter – New Delhi
  • Head – Anubrata Biswas
  • Tagline – “Banking is now at your fingertips”.

(2). FINO Payments Bank

  • Headquarter – Mumbai
  • Head – Rishi Gupta
  • Tagline – “Qadar aapki mehnat ki”.

(3). Indian Post Payments Bank

  • Headquarter – New Delhi
  • Head – Suresh Sethi
  • Tagline – “Aapka Bank, Aapke Dwaar”.

(4). Jio Payments Bank

  • Headquarter – Mumbai
  • MD & CEO – H. Srikrishnan
  • Tagline – “Your everyday bank…”.

(5). Paytm Payments Bank

  • Headquarter – Noida
  • Chairman – Vijay Shekhar Sharma
  • Tagline – “Simplifying Payments for India”.

(6). Aditya Birla Payments Bank

  • Headquarter – Mumbai
  • MD & CEO – Sudhakar Ramasubramanian
  • Tagline – “Get to know us better”.

While Airtel Payments Bank was the first to start operating as a payments bank and JIO payments bank is the latest one which has started its operations. Out of 11 entities Cholamandalam Distribution Services, Sun Pharmaceuticals and Tech Mahindra have surrendered their licenses.

Click here to read the Overview of Indian Banking Sector.

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