Take a look at this fact. India is home to nearly 18% of the World’s Population. Unfortunately, more than 70% of the adult population does not understand even the basic financial concepts. There is a lack of customer awareness on the benefits of banking, particularly in the rural areas. Many agents are not happy with the incentives offered to promote banking in rural areas.
PM Narendra Modi launched the highly successful PMJDY scheme, so that banking and insurance services, reach each household in India. Nearly 32 Crore citizens, have opened PMJDY accounts. Now, India is looking to take the next leap in banking. Payment Banks are growing and lots of citizens are opening accounts with payment banks.
What’s a payment bank and why India needs them….Let’s take a look. Want to know more on FDs and RDs? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.
1. Things to know on payment banks
Let’s first understand what a payment bank is. A payment bank is just like a normal bank, but is allowed to perform only a few banking services. Payment banks are regulated by RBI. You can open a savings bank account or even a current account, with a payment bank. Payment banks give you debit cards to withdraw money. You also enjoy the mobile banking facility and internet banking facilities like NEFT/RTGS/IMPS.
Payment Banks can only accept deposits below Rs 1 Lakh. Payment Banks do not issue credit cards. Payment banks offer interest on your deposits. Airtel payment bank offers an interest of 5.5%, India Post payment bank offers 5.5%, Fino Payments Bank offers 4% and Paytm payment bank offers 4%.
In a joint venture between SBI and Reliance Industries, Mukesh Ambani’s payment bank Jio Payments Bank, has kicked off operations. SBI has a 30% stake in Jio Payments Bank and the rest is owned by Billionaire Mukesh Ambani.
The aim of payment banks is to promote cashless and digital transactions across India. Yes, PMJDY has brought down the number of unbanked citizens in India, but lots more needs to be done. This is where payment banks come in.
It’s nearly impossible for normal banks to open branches in all parts of India, especially distant villages. Payment Banks through the use of mobile phones can plug this gap.Payment Banks bring banking services to migrant laborers and lower income groups. All banking services are provided through mobile phones, with low transaction fees for services.
Payment banks accept deposits only up to Rs 1 Lakh and they also cannot lend. Payment Banks make profits by partnering with normal banks to offer customers, loans and investment products. Payment Banks make profits by selling third-party products. Through payment banks, loans and investment products reach citizens in many parts of India.
Payment Banks promote cashless transactions in India and eliminate the need for cash transactions. There’s no need to exchange soiled or bad rupee notes, saving on the cost of regeneration of fresh rupee notes. After demonetization, the use of debit and credit cards has increased in India. However, merchants bear costs when accepting debit and credit cards. Payment Banks through the use of the mobile platform, can easily penetrate rural India and bring down transaction costs.
Payment Banks are very important for migrant labourers, lower income groups, small businesses and the unorganized sector. Be Wise, Get Rich.
The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.
Subscribe to our Youtube Channel
Hello friend! I am your personal financial advisor. By the end of this interactive session, I will help you to plan yours and your family's finances to ensure a better future.