Payment Banks

What are Payment Banks?

Payment banks are types of banks that operate without issuing credit. These types of banks were created as a new Indian model of banking system by the Reserve Bank of India(RBI). These banks are allowed to accept some amount of deposit as it is needed to make the bank functioning. The max amount of deposit an individual can make is ₹2,00,000. The payment banks are not allowed to give credit loans and credit cards, it is strictly prohibited. The payment banks are allowed to operate with current and saving bank accounts. The main objective of these banks are to provide debit cards, ATM cards and facilitate mobile banking along with net banking services. The payment banks are business entities that operate without any credit risks.

In 2014, a committee organised by Nachiket Mor to research and study about ‘Comprehensive Financial services for small business and households’. The main goal of the organised committee was to suggest measures for achieving financial inclusion and  increasing the access to financial services. After submitting reports to Reserve Banks OF India with one of the main objectives being the topic ‘payments bank’  as to help people of lower income backgrounds.

Why Should Someone Opt For Payment Banks?  

The main objective of payments bank is to  spread the payment and financial services to lower income households and businesses. The payment banks also help in solving problems for migrant workers that have to switch places which makes it harder to have a stable banking system. Payments banks will help them manage their financial problems better.The payment banks help propagate financial services to rulers and scheduled areas. Payment banks do not accept deposits from NRIs. The first payment bank of India was set up by Bharti Airtel as Airtel Payments Bank.

Advantages of Payment Banks

• Expanding the rural banking and financial centralisation/inclusion – The payments bank helps in setting up lower income areas, households and migrant works with easy to access financial methods and makes it easier for their inclusion in the whole counties financial system.
• Expanding  the traditional finance system – The introduction of payments banks brings a modern approach to the whole financial system. The payments banks aren’t like any other bank as they don’t deal in credits. All other processes that a bank needs to perform are present in payments banks except the issue of credit loans..
• Acts as an alternative to commercial banks – The commercial banks are the most common types of banks in the peasant banking and finance system. Introduction of payments banks brings a new way of managing finance competing with the commercial banks.
• Deals with low value and high volume transactions.
• Diversification and better access to services – The payment banks act a a modern way of making financial decisions while being available to rural areas and areas with less development. The access to banking services through payments banks make it easier to be involved in the whole Indian banking system.

Disadvantages Of Payments Banks

Awareness between  the masses to take advantage of these services – The payments bank being an allround facility bank for the rural people, they aren’t still aware of the fact that they can avail good finance facilities. 

• Less amount  of incentives for the workers to include themselves in these work roles
• Less attention towards  infrastructure and operational resources – Lack of attention toward the building of payment banks and their customer service centre
• Lack of awareness about mobile and internet technology – Due to lack of education and awareness, people are unable to understand and access mobile banking.

Post Payments Banks

Indian Post Payments Bank (IPPB) is a branch created by the India Post for the purpose of payments banks. This bank has attracted at least 4 crore customers in 2020. IPPB aims to make all of India’s 155,015 post offices as places of accessing payments banks, and postal postman and Grameen Dak Sewaks will provide doorstep banking services. IPPB offers money transfer, savings account and insurance services through external parties, utility and bills payments.

The Post Payments Banks also provide:

1.QR scans are offered so customers don’t have to remember their account number.

2.Rupay debit card helps them use Indian government banking systems.

3.Immediate payments services for the needy in rural areas.

4. Adhaar enabled payments service for the rural areas as an easy option for using banking services. 

Customer Care Support Of Payment Banks

For customer care services people need to contact the payment banks contact services for grievances. Each payment bank has a customer portal where people can access information about what that specific payment bank offers.

Conclusion

The above article talks about payment banks, post payment banks and their services. It has detailed information on all topics related to post payment banks. Post payments bank is basically a commercial bank but with no credit loan services.