Payments Banks Current Affairs

Paytm Launches Payments Bank

Paytm has rolled out its Payments Bank operations by launching its first physical branch in Noida. With this launch, there are three payments bank operational in the country, the other two being Airtel Payments Bank Ltd and India Post Payments Bank Ltd. The Paytm Payments Bank will be the first bank in the country to offer cashbacks on deposits.

Significance

As a Payments Bank, Paytm will be able to accept deposits upto Rs 1 lakh per customer in wallet and savings/current accounts. Further it can also offer other services like Debit Cards, Online Banking and Mobile Banking. It will not be allowed to lend to customers. However, it will be able to offer financial products like loans, insurance, mutual funds, pension funds etc by partnering with other financial institutions and banks.

Other Salient Features

Interest Rate 

Paytm Payments Bank will offer 4% interest on savings account in line with the interest rates of all leading commercial banks including State Bank of India, Bank of Baroda and ICICI Bank Ltd, which also offers 4% interest rate on savings account deposits.

Cash withdrawal charges

Customers will be given five free transactions in non-metro cities and three free transactions in metro cities. After the exhaustion of free limits, customers will be charged Rs 20 for each subsequent cash transactions.

Debit Cards

The customers will be offered a Rupay debit card at an annual subscription cost of Rs 100 plus delivery charges. The bank will also provide a cheque book at a cost of Rs 100.

Online fund transfer

Paytm Payments Bank will provide services such as Immediate Payment Service (IMPS), Unified Payment Interface (UPI) and National Electronic Fund Transfer (NEFT) free of cost to its customers.

Background

The Reserve Bank of India (RBI) had given in principle approval to Paytm Payments Bank Ltd, an entity majority owned by One97 Communications earlier this year. In 2015, RBI had awarded ‘in-principle’ approval to Vijay Shekhar Sharma to set up a Payments Bank along with 10 others with an objective of deepening financial inclusion. The Paytm Payments Bank aims to plans to roll out operations in 31 branches and 3,000 customer service points in the first year.

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IndiaPost gets payments bank licence from RBI

IndiaPost under Department of Posts (Union Ministry of Communications and Information Technology) received final payments bank licence from the Reserve Bank of India (RBI).

With this, India Post became the third entity after Bharti Airtel and Paytm to receive final payments bank licence to roll-out of banking operations commercially under the permit.

Key Facts
  • As per the initial road map, each post office in the country will offer the post bank services. The department of post has an existing network of around 1,55,000 post offices currently.
  • IndiaPost plans to open 650 new branches for the payment bank. These branches will be co-located with the existing post offices.

About Payments banks

  • Payments banks are a new model of banks conceptualised by the Reserve Bank of India (RBI) to meet government’s financial inclusion target.
  • It will be set up as a differentiated bank and will confine its activities to acceptance of demand deposits, remittance services, Internet banking and other specified services but cannot undertake lending services.
  • Payments banks can accept deposits up to Rs. 1 lakh per account from individuals and small businesses. They can issue ATM/debit cards but not credit cards. They can also issue other prepaid payment instruments.
  • They can distribute non-risk sharing simple financial products like mutual funds and insurance products. Non-resident Indians (NRIs) are not be allowed to open accounts in payment banks.
  • This new model of banking allows mobile firms, supermarket chains and others to cater to banking requirements of individuals and small businesses.

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