After Bharti Airtel launched its payments bank in January, Idea cellular has set itself a June threshold to launch payments bank operations. Interestingly, Vodafone was rumoured to go live with their payments bank in March 2017, however, that does not seem to have happened.
The company has recently received the Reserve Bank of India’s (RBI) final approval to start off its payments bank and is on the stage to integrate its systems with those of the National Payments Corporations of India and the RBI. Unlike the traditional banks, the services in Payments bank differ and are mostly transaction-intensive banks. They cannot offer credit or offer depository services.
“It is clearly a scale game, unlike traditional banking. In traditional banking, you can put up one branch and still do well. Here, it is scale since technology platform is the same which has to accommodate many transactions. So more the transactions you accommodate, more benefit you can give to the customers,” said Sudhakar Ramasubramanian, chief executive officer (designate), Aditya Birla Idea Payments Bank.
As the company hopes a significant part of its telecom subscribers to enrol for the banking services, the move will facilitate interbank electronic transactions.
“We have an existing customer base of 20 crores (for telephone services) … hence we start off with a huge potential customer base which is a big positive for our payments business,“ said Sudhakar Ramasubramanian, Chief Executive-designate of Aditya Birla Idea Payments Bank, as cited on ET.
“We will also convert our 20 lakh retailer base across the country into banking touch points to take financial services to the rural areas,” he added.
What are payment banks?
Payment banks are a new model of banks conceptualised by the Reserve Bank of India; they can accept restricted deposit which is limited to Rs 1 lakh per customer and may be increased later. The banks are not allowed to issue loans and credit cards; both current account and savings accounts can be operated by such banks.
The first live payment bank was launched by Airtel, while PayTM was the second to start off the service.
The banks will allow individuals to use the payment bank account to make daily or monthly cash transactions, either through debit card or through mobile, which allows users to guard against debit card fraud, as it allows tracking smaller balance in these accounts. The facility will also provide students to pay their fees using it.
Benefits
Airtel Payment banks when rolled out had some great offers – charging a fee of 0.65 percent on all cash withdrawals from the account and providing one minute of mobile talk time for every rupee deposited at the time of opening an account. Other than this, the OTT-Telco was providing free personal accidental insurance of ?1 lakh with every savings account. Also, they offered the highest interest rate of 7.25% on a savings account, which is unheard of…
The payments bank services will allow companies like Idea and Bharti Airtel to expand their portfolio while using their existing database. For now, let’s wait and watch how the services turn out to be; if anyone of you has already tried, then feel free to sound off your experience with the payments bank below.
Most of the traditional banks are finding ruthless ways to charge customers which includes service tax additionally. There biggest failure of NPA are not because of innocent savings account holders. To cover there failures and loss of Money, Banks started day light robbery with additional charges which leads most of the customers to close unused accounts and hoard money at home. I am one of the victim of banks robbery. I lost my hope on banking system. Greedy telecom operators like Airtel and Idea banking never going to change this scenario. If they have possibility then they will definitely rob customers with charges. Waste of time to believe them, As we already know how they robbed each and every telecom user with higher data prices and call charges. Do we really have to believe them? Paying them is not at all worth. There quality of service is not worth and payment doesn’t match with there services.