Airtel’s Payment Bank: 7.5 Percent Interest and More Explained in 10 Points

In August last year, the RBI announced the names of the 11 companies that received a payments bank license. Payments banks are a new type of bank which allow for small accounts, and are meant to help grow the reach of banking in India by letting businesses with established distribution networks enter banking.

Now, we're finally seeing some movement, as Airtel - one of the 11 companies - has rolled out a pilot project for its payments bank in Rajasthan. Chosen Airtel retail stores in Rajasthan will act as branches for the new payments bank - each of these stores has been given fingerprint scanners which are used to enrol people and authenticate users. Here's everything you need to know about Airtel's payments bank, and the category in general, in 10 simple points:

1. Airtel has launched its payments bank - the first in India - across 10,000 Airtel retail outlets in Rajasthan.
2. You do not have to be an Airtel subscriber to open an account with the bank. Anyone with an Aadhaar card can get an account with the Airtel payments bank - your account is opened after a paperless eKYC, authenticated with your fingerprint.
3. The Airtel retail outlets will double up as branches of the Airtel bank. You will be able to create an account, deposit or withdraw money, all at the Airtel stores.
4. The move is supposed to boost financial inclusion - mobile companies have been able to set up stores in small towns and even villages, while bank branches are limited in reach because of the need for greater infrastructure. Now these mobile stores can function as branches.
5. Though payment banks can issue ATM or debit cards, Airtel has decided not to do so - you will need to go to the Airtel outlet to withdraw money.
6. Airtel is paying an interest of 7.25 percent per year on accounts. Banks such as Axis, ICICI, and HDFC offer 4 percent interest, while Yes Bank and Kotak offer 6 percent. RBL Bank offers 7.1 percent interest, but only for accounts with a balance of above Rs. 10 lakh.
7. Aside from the retail store, if you have a smartphone, you will be able to access your account through the Airtel Money app. You will be able to check your balance, or transfer money. This can also be done by sending short messages via SMS if you have a basic feature phone.
8. The payment bank accounts have a balance limit of Rs. 1 lakh - the same as a mobile wallet after KYC.
9. One big difference from wallets is that the payments bank can pay interest, and can choose to offer ATM and debit cards.
10. Payments banks are not allowed to offer loans, or offer credit cards. The payments banks can also only invest the money people deposit in government securities.

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