Airtel pilots India's first Payments Bank

Telecoms giant Bharti Airtel has launched the first of India's new wave of 'payments banks', going live with a pilot across the state of Rajasthan.

In a bid to take advantage of the mobile revolution to increase financial inclusion, last year India's government granted Airtel, along with others such as Paytm and the Department of Posts, so-called 'payments bank' licences.

These new players, taking on traditional lenders, are able to take deposits of up to Rs 1 lakh, issue debit and ATM cards, and facilitate online transactions - but are not allowed to lend money.

Airtel Payments Bank has now become the first of the new breed to open up to the public through a pilot in Rajasthan to test its systems ahead of a country-wide launch.

Taking advantage of its vast retail network in the state, Airtel is inviting customers in towns and villages to open bank accounts using just their government Aadhaar ID number in one of its 10,000 stores, which will also act as banking points. Airtel mobile numbers will act as account numbers.

A network of merchants across Rajasthan will accept digital payments from Airtel Bank from day one, with 100,000 onboard by the end of the year. Customers will also be able to make money transfers to any bank account in India and reap a 7.25% interest rate on deposits held in savings accounts.

Shashi Arora, MD & CEO, Airtel Payments Bank, says: "Airtel Payments Bank is fully committed to the Government’s vision of financial inclusion and banking for all. Airtel Payments Bank will play an important role in taking banking services to the last mile in a quick and efficient manner and benefit millions of unbanked citizens of this country."

Channels

Retail banking Financial inclusion Payments

Keywords

Mobile & online banking

Comments: (4)

A Finextra member 25 November, 2016, 01:28

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While we congratulate Airtel on the launch, I guess they are unlikely the first payment bank to live. Equitas lauched payments bank on 3 Sep ... please refer to http://www.thehindubusinessline.com/money-and-banking/equitas-small-finance-bank-starts-operations/article9075512.ece

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Subhabrata Sanyal - Capgemini - Pune 25 November, 2016, 11:27

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I am interested to know, other than corss selling of their telecom product to their payment bank customers, how else they will earn profit

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A Finextra member 26 November, 2016, 06:40

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@Vijay, Equitas is small finance bank, not a payments bank.

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Hitesh Thakkar - SME - Fintech startups (APAC and Africa) - India 27 November, 2016, 14:56

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Financial Inclusion - covering more citizens under banking system has several agenda. One of the teething issue was Telecom operators with pre-paid wallets. Coming up with Payments bank license protects for running parallel creation of 'Money'.

Indian govt has come up with brilliant strategy JAM Trinity - Prime Minister Jan Dhan Yojana (PMJDY), Aadhaar and Mobile connectivity (JAM) to kill several birds with single stone such as DBT (Direct Benefit Transfer) of Govt benefits, low cost of vehicle of mobile wallet/banking ( NPCI with UPI) and world's largest biometric database UIADI/AADHAR database.

Payments banks can see synergy to work with traditional banks for opening more banks accounts and service using low cost channels ( read Mobile and BC banking). Payments banks can find several ways to build business services/value added services as all these accounts are under KYC (or e-KYC) and ready for more digital services through universal banks on collobrative mode.

SBI and Reliance JIO has already started several steps towards it and more payments banks will come up with some brilliant.

Ofcourse, these leads to demand of issuing more universal banking licenses as well as merger of existing banks to consolidate and bring efficient economic enviornment in the country.