Airtel Payments Bank reduces interest rates by 175 bps to 5.5%

Airtel Payments Bank has reduced its interest rate by 175 basis points to 5.5 percent per annum from 7.25 percent per annum earlier, effective Thursday.

This cut in interest rate could be a way of keeping rates competitive.

"An attractive interest rate of 7.25 per cent was an introductory offer, given that Airtel Payments Bank was leading the roll-out of a completely new segment of banking services in the country. The revised interest rate continues to be the highest in the payments bank segment," an Airtel Payments Bank spokesperson told Business Standard.

The payments bank, launched in January 2017, was the first of its kind but more payments banks have entered the market since then. Last week, Idea Cellular launched Aditya Birla Idea Payments Bank.

The Department of Posts is going to roll out the India Post Payments Bank in April.

In December 2017, Airtel Payments Bank was accused of opening accounts for customers without their consent using Aadhar e-KYC based details. This led UIDAI to temporarily suspend e-KYC licenses of Bharti Airtel and Airtel Payments Bank.

This controversy allegedly was the reason for the resignation of Airtel's Payments Bank Managing Director and Chief Executive Officer Shashi Arora.