How Paytm Payments Bank, Airtel Payment Bank are Different From Normal Banks
Paytm recently launched their payments bank and at present there are four payments banks operating in India – Paytm Payment Bank, Airtel Payment Bank, India Post Payments Bank and FINO Payment Bank.
Digitalization has now truly taken the center stage. Banking and all other kind of financial services has made its presence in the digital space and it’s growing at a very fast pace; and the introduction of payments bank is one of them. Like normal banks, payments bank perform almost all banking operation but doesn’t engage in any credit providing service. They rather function on a smaller business scale compared with other banks. Few more differences are listed below:
Interest rates: The standard interest rate for commercial banks range from 3.5 – 6%. Paytm’s bank offers an interest rate of 4% on savings account and 7% on FDs whereas, India Post payments bank is offering between 4.5 – 5.5% for savings account. As of now, Airtel payments bank is providing the highest interest rate of 7.25% which is a very lucrative rate compared to other commercial banks. Some other small scale commercial banks such as RBL bank offers interest rate of 7% and Yes bank offers interest rate of 6.25% but that too depends on the deposit amount of the person.
As per the guidelines set by RBI, payments banks cannot lend money they can only take deposits or accept payments from the users. Banking experts consider by offering higher interest rates on deposits competition in this sector is definitely expected to rise.
Minimum Balance: Most banks levy a charge on its customers in case he/she fails to hold a minimum balance in their bank account. However, Paytm payments bank came up with zero balance account scheme where no minimum balance is required to be maintained by the user and that too without any charge. Few other banks and digital banking systems has also introduced this scheme but most bank charges for not maintaining minimum balance.
Charges: Usually banks charge a certain amount of fees for transactions made online, along with most payment banks. Among payment banks for online transfers, India Post payments bank charges Rs. 5 for IMPS and NEFT is free of cost. Airtel payments bank doesn’t charge anything for online transfers within the bank otherwise it charges 0.5% of the transferred amount. Paytm payments bank is not charging anything for any online transaction, all fund transfer services like IMPS, NEFT and UPI online transactions are free of cost for the user.
For cash withdrawals also, bank account holders are charged differently by different payments banks. Paytm payments bank follows the standard RBI rules of cash withdrawal charges like to all other commercial banks in India. For the same, Airtel payments bank charges 0.65% of the withdrawal amount; India Post payments bank doesn’t charge any fee for withdrawals made from their own ATM or any Punjab National Bank’s ATM if not it too follows the same RBI rules.
Process: The application process to open a bank account of payments bank is made very easy as compared to other banks. A user can open his/her bank account in no time through their mobile applications just by providing details like Aadhar number with KYC verification.
India Post payments bank offers a free debit card with annual maintenance fee of Rs.100 from second year. Paytm payments bank is also providing digital debit card for free and an annual subscription charge of Rs.100 for the physical card. It is also giving its customers with checkbook for a charge of Rs.100.
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