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Payment Banks in India

Last Updated : 28 Nov, 2023
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Payments Bank was founded on the Nachiket Mor Committee’s suggestions to run on a smaller scale with little credit risk. The goal is to promote financial inclusion by providing banking and financial services to unbanked and underbanked areas, migrant workers, low-income households, small entrepreneurs, etc. They are registered under the Companies Act of 2013 but supervised by the Banking Regulation Act of 1949, RBI Act of 1934, Foreign Exchange Management Act of 1999, Payment and Settlement Systems Act of 2007, and others.


Features of Payment Banks

1. Limited Banking Function: A payment bank is a distinct type of bank that exclusively carries out the specific banking functions permitted by the Banking Regulation Act of 1949.

2. Business Correspondent: Activities encompass deposit acceptance, payment and remittance services, provision of internet banking, and functioning as a business correspondent for other banks.

3. Deposits Limit: Initially, they can accept deposits of up to ₹1 lakh per individual.

4. Fund Transfer: They can provide support for financial transactions such as money transfers, insurance services, and the marketing of mutual funds.

5. Issue Debit Cards Only: Furthermore, they possess the capability to solely provide ATM/debit cards, excluding the option of issuing credit cards.

6. Prohibited from Forming Subsidiaries: They are forbidden from establishing subsidiaries to offer non-banking financial services.

7. Lending Prohibited: They are prohibited from participating in any lending activity.

8. Prohibition Against Loans: Payment Banks are prohibited from granting loans and are ineligible to receive deposits from Non-Resident Indians (NRIs).

9. Minimum Capital: The minimum capital requirement for a payment bank is ₹100 Crore.

Payment Banks Regulations

  • The required minimum capital is ₹100 crore.
  • The promoter’s interest should stay at least 40% over the first five years.
  • Foreign shareholding in these banks will be permitted under India’s FDI guidelines for private banks.
  • The Banking Regulation Act of 1949 will govern voting rights. The voting rights of any shareholder are limited to 10%, which the Reserve Bank of India might increase to 26%. 25% of its branches must be located in underserved rural areas.
  • To distinguish itself from other types of banks, the bank must use the term “payment bank” in its name.
  • Under Section 22 of the Banking Regulation Act of 1949, the banks will be licenced as payment banks and registered as a public limited company under the Companies Act of 2013.

List of Payment Banks in India

Name of Bank


Date of Establishment


Owned By

Airtel Payment Bank

New Delhi

January 2017

Joint venture between Bharti Airtel and Kotak Mahindra Bank

Anubrata Biswas

Fino Payment Bank

Mumbai, Maharashtra

April 2017

Promoted by Fino Paytech, ICICI Group, and Bharat Petroleum

Rishi Gupta

India Post Payment Bank

New Delhi

September 2018

Operated by the Department of Posts, Ministry of Communications

J. Venkatramu

Paytm Payment Bank

Noida, Uttar Pradesh


Operates under One97 Communications, the parent company of Paytm

Vijay Shekhar Sharma

NSDL Payment Bank

Mumbai, Maharashtra

Oct 2018

Promoted by National Securities Depository Limited

Mr Ashutosh Singh

Jio Payment Bank

Navi Mumbai, Maharashtra


Joint venture between Reliance Industries and State Bank of India

Reliance Industries (70%) State Bank of India (30%)

1. Airtel Payment Bank

Bharti Airtel, India’s largest telecom provider, launched Airtel Payments Bank in January 2017 to promote the government’s promised cashless transformation. The Airtel Payments Bank is a distinct bank dedicated to Transforming the Way India Banks by reinventing every process, product, and service involved with banking with the customer’s needs at the centre of every effort. Its methods are designed to make banking easier and more straightforward for all customers. They are empowering clients by expanding the availability of their services, whether online or in-person. And they are working hard to make the banking experience more courteous for all of our clients. Airtel Payments Bank’s mission is to render banking accessible, simple, and inclusive to all Indians.

2. Fino Payment Bank

On June 23, 2007, the bank was established as the Fino Fintech Foundation.Following the surrender of the licence under Section 8 of the Companies Act 2013, it was renamed to Fino Fintech Private Limited, and a new certificate of incorporation was issued on December 15, 2015. Following the shift of the banking institution to a public corporation, the official title of the institution was modified on 03 February 2017 to Fino Fintech Limited. On April 4, 2017, the official title of the financial institution was renamed to Fino Payments Bank Limited after receiving approval from the RBI. On June 30, 2017, the bank opened its doors for business. The bank is a completely owned subsidiary of FINO PayTech Ltd, which provides business and banking-specific platform-based solutions and financial inclusion services. The bank offers an extensive variety of financial products and services to the rural poor, as well as those from underprivileged and unserved classes.

3. India Post Payment Bank

India Post Payments Bank (IPPB) was established under the Department of Post, Ministry of Communication, with the Government of India owning 100% of the stock. On 30 January 2017, IPPB was launched as a pilot project in Ranchi (Jharkhand) and Chhattisgarh, with the goal of having presence across India by the fiscal year 2018-2019. Through a network of a single location and 649 banking outlets managed by Business Correspondents, IPPB has expanded its reach across India, covering post offices.

4. Paytm Payment Bank

Paytm Payments Bank (PPBL) is an Indian payments bank headquartered in Noida that was created in 2017. It is a subsidiary of the mobile payment business paytm. It was granted a licence by Reserve Bank of India to operate a payments bank in the same year, and it began operations in November 2017. The RBI granted the bank scheduled bank status in 2021. Vijay Shekhar Sharma owns 51% of the company, while One97 Communications owns 49%.

5. NSDL Payment Bank

The headquarter of the NSDL Payments Bank is located in Mumbai. The organisation commenced its activities in October of 2018. NSDL Payments Bank Limited is a non-governmental organisation based in India. The legal classification of this public company is “company limited by shares.

6. Jio Payment Bank

Jio Payments Bank Limited, an Indian payments bank that commenced operations in 2018, operates as a subsidiary of Reliance Industries’ Jio Platforms. The Reserve Bank of India (RBI) granted Reliance Industries preliminary sanction to establish a payments bank in accordance with the Banking Regulation Act of 1949. Then, in November 2016, in collaboration with the State Bank of India, it established Jio Payments Bank Limited. Jio Payments Bank Limited is a State Bank of India and Reliance Industries joint venture in the proportions of 70:30.

Activities That Can be Performed by Payment Banks

1. Deposits: Payment banks accept ₹2,000,000 deposits. It accepts savings and current account demand deposits.

2. Government Securities: Deposits can only be invested in secure government securities as Statutory Liquidity Ratio. This must be 75% of demand deposit. Other designated commercial banks will hold 25% as time deposits.

3. Cross Border Remittances: On current accounts, payments banks can make personal payments and receive cross-border remittances.

4. Issue Debit Cards: Payment banks issues debit cards.

Activities That Cannot be Performed by Payment Banks

1. Payment Bank Can Not Lend: Payment banks cannot lend since they have an RBI ‘differentiated’ bank licence.

2. Cannot Issue Credit Cards: No payment banks have the authority issue credit cards.

3. Payment Banks Don’t Accept Time Deposits: It doesn’t accept NRI or time deposits.

4. Subsidiaries: It cannot create non-banking financial subsidiaries.

Difference between Payment Banks and Commercial Banks


Payment Banks

Commercial Banks

Scope of Activities

Payment banks typically concentrate on offering basic financial services, such as receiving deposits and carrying out money transfers. They are prohibited from providing loans or issuing credit cards. Payment banks aim to facilitate financial inclusion by targeting individuals and communities that do not have access to traditional banking services or have limited access to them.

Commercial banks provide diverse financial services such as deposit acceptance, loan provision, credit card issuance, and a variety of investment products. Payment banks have a narrower range of activities in comparison to them.

Ownership and Regulation

Payment banks are subject to regulation by the central bank or financial regulatory authorities of the country. Ownership of the entity might be either private or corporate.

Commercial banks have diverse ownership arrangements, like private, public, or a hybrid composition. They are governed by extensive rules to preserve stability and safeguard the interests of customers.

Interest Rates

Payment banks typically provide interest on deposits, but at potentially lower rates compared to commercial banks. Their money is generated by collecting fees and charges on transactions.

Commercial banks provide a variety of interest rates for deposits and loans, which vary based on the specific account or loan. They create revenue through the interest spread, which is the difference between the interest accrued on loans and the interest disbursed on deposits.

Credit Card

They are prohibited from issuing credit cards

They can issue credit cards

Primary Focus

The main emphasis is on the transfer of funds and remittances.

Remittances offering is not the main focus of Commercial banks

Balance Limits

The maximum balance limit is ₹1 lakh in savings account.

There is no limits on deposit account balances.

Payments banks will increase financial inclusion while also improving the country’s poorer sections, enabling them to take part in the country’s economic growth.

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