In 2015, the Reserve Bank of India (RBI) took a revolutionary step by introducing payments banks in the Indian financial system. As per World Bank’s Global Findex Database, India is home to 11% of the world’s unbanked adults, second only to China. Payments banks are one of the countermeasures against this figure. Some payments banks are Airtel, Jio, Paytm and Indian Post. Considering the full range of benefits on offer, opening a payments banks account can be a wise choice. Let us have a look at how it can benefit you.
No minimum account balance (MAB) required
Opening a new account with commercial banks always comes with the worry of MAB. It can range anywhere between Rs. 1,000 to Rs. 25,000. Not everyone can lock so much money to maintain a balance, especially low-income households and migrant workers. You need not worry about the minimum threshold with a payments bank account. It is a zero-balance account, which can be used to manage daily expenses.
Equal interest rates
Payments banks are not behind in offering industry-level interest rates. Just like a regular bank account, you can earn at least 4% rate of interest on your payments bank account. Some payments banks even provide higher rates. All authorised payments banks have their current retail outlets that function as banking points. Hence, the setup and operations costs are relatively lower. This allows payments banks to offer attractive and equivalent interest rates to its customers.
The most important benefit of a payments bank account is the accessibility and convenience. You do not have to locate a bank branch on your way to the office or in your neighbourhood. Instead, a vendor or a shopkeeper in your vicinity or on your way to work could be a bank touch-point. The Airtel Payment Bank has four lakh banking points while Indian Post has 650 post offices acting as touch points currently. Additionally, while bank branches operate only on weekdays and specific timings, these touch-points work every day.
A payments bank account need not be your sole bank account. Operate it parallelly with your commercial bank account to manage expenses. The maximum account balance permissible in a payments bank account is Rs. 1 lakh. Therefore, when you use this account for bill payments and recharges, you are limiting the risk exposure to just Rs. 1 lakh. The online and mobile banking facilities are also safe with multiple layers of security and authentication.
Since, operational costs are lower payments banks can offer a wide range of benefits to its customers. For instance, the Airtel payments bank offers free personal accident insurance up to Rs. 1 lakh. These banks also provide discounts and cash back offers to attract and retain customers. An exciting benefit that Indian Post payments bank offers is doorstep-banking service.
Payments bank account is a smart way to manage your daily expenses, reduce risk and earn better interest rates. The online banking facility and digital debit card systems can help you go cashless as well.