Airtel is the first company in India to launch its payments bank, and Paytm is soon going to as well. Third in the line, India Post has received the payments bank license from the Reserve Bank of India(RBI) to start its commercial banking operations.
A Payment Bank is a new concept by the Reserve Bank of India that can accept a restricted deposit which is currently limited to Rs 1 lakh per customer. 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.
According to a report by the Hindu, “Tech Mahindra, a consortium of Sun Pharmaceutical Industries Ltd promoter Dilip Shanghvi, IDFC Bank Ltd and Telenor Financial Services and Cholamandalam Investment and Finance Co. backed have dropped their plan to roll out payments bank.”
For now, India Post Payments Bank(IPPB) will offer demand deposits such as savings and current accounts upto a balance of Rs 1 Lakh, along with digitally enabled payments and remittance services of all kinds between entities and individuals. In due course, IPPB will also provide access to third party financial services like insurance, mutual funds, pension, credit products, forex, and more.
India Post has also appointed an interim Managing Director and CEO for the operations, A P Singh. Full fledged operations are expected to be started before the end of March 2017. IPPB will offer banking services through digital channels like mobile and internet banking platforms, UPI, debit cards, ATMs, PoS and MPoS.
Features of IPPB
IPPB offers 3 distinct accounts to its customers –
- Regular Account – Safal
- Basic Savings Bank Deposit Account (BSBDA) – Sugam
- BSBDA Small – Saral
While the Safal Account is packed with features, the Saral account is aimed at people with limited banking experience. All customers of IPPB would be eligible to avail a host of different modes of domestic remittance subject to the stipulated constraints – NEFT, IMPS, AEPS, UPI and NUUP.
All the three bank account options will request you to make Rs 100 initial minimum deposit, with no minimum balance limit. Both Safal and Sugam need KYC for verification and minimum age of 10 years, but Saral can be opened by anyone above the age of 10 years.
The interest rates are not very attractive, with 4.50% if quarterly average balance is upto Rs 25,000, 5.00% if quarterly average balance is between Rs 25,000 and Rs 50,000, and 5.50% if the average quarter balance is above Rs 50,000. You can go through the complete list of rules here.
Compared to this, Airtel is offering 7.25% interest rate with no limits. In general, the policies also seem to be a little relaxed, and this is where India Post could lose out. As more Payments Banks pop up soon, this space will become very competitive and beneficial to the customers.
