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How are payment banks different from their regular counterparts?


How are payment banks different from their regular counterparts?

Banking is one of the sectors hugely impacted by digitization. This has led to the steady emergence of payments banks such as Airtel Payments Bank, Paytm Payments Bank, FINO Payments Bank and India Post Payments Bank.  Firstly, commercial banks usually offer between 3.5-6% by way of interest. Airtel Payments Bank is offering 7.25% while Paytm is offering 4% interest rates on savings accounts and 7% for fixed deposits. India Post Payments Bank is offering 4.5-5.5% as interest for savings accounts. Payments Banks cannot lend like their regular counterparts. They are only empowered to accept deposits or payments.

Most banks have charges for customers in case the minimum account balance is not maintained. In case of payment banks, Paytm has zero minimum balance requirements. Most payments banks are expected to maintain a system of zero charges for not adhering to minimum balance norms. Banks usually have certain online transaction fees and so do payments banks. India Post charges Rs.5 in case of IMPS while NEFT comes absolutely free of cost. Additionally, Airtel does not have any charges in case of any transfers within the Airtel Payments Bank. Otherwise, it is a nominal 0.5% of the amount transferred. For every online transaction, Paytm does not have any charges and all transfers via NEFT, IMPS and UPI come absolutely free of cost.

Also, payments banks follow standard cash withdrawal charge rules mandated by the RBI. Paytm Payments Bank has similar charges as other commercial Indian banks. Airtel’s charge is 0.65% of the amount being withdrawn and India Post does not have any fee for withdrawals made from any PNB (Punjab National Bank) ATM or its own ATM. Otherwise, RBI rules are followed with regard to charges for withdrawal. For opening a bank account, the procedure at a payments bank is easier. The accounts can be instantly opened via mobile apps with information like the Aadhar number and verification of KYC documents. India Post payments bank offers a debit card absolutely free of cost with Rs.100 as a maintenance fee from the second year onwards.

Paytm payments bank is also offering a free digital debit card and Rs.100 as an annual subscription charge for the physical debit card. It also offers checkbooks for Rs.100.

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