Payments banks are aimed at widening penetration of financial services by bringing rural India into the formal banking system.
Prime Minister Narendra Modi launched the India Post Payment Bank on September 1, 2018, making it the sixth such financial institution to come into operation in the country. A payments bank is aimed at widening the penetration of financial services by bringing rural India into the formal banking system. Here is how a savings account with a neighbourhood bank fares against a savings account with a payments bank:
- Interest: Some Payments Banks are offering interest up to 7.5 percent, which makes it a lucrative option. Bank savings accounts give you around 5 percent as interest, going up to 6 percent or 6.25 percent. However, if you pick a zero balance savings account, your earning will be capped at 3 or 4 percent.
- Maximum deposit amount: Every payments bank allows you to hold a maximum of Rs 1,00,000 in your account. On the other hand, there is no limit on the maximum amount when you choose a regular savings account with a bank. However, with payments bank, you do not have to worry about maintaining any minimum balance.
- Additional Financial Services: While opening a savings account with a bank, you can ask the bank for a loan, credit card or make investments on your behalf. However, when you open a savings account with a payments bank, such facilities are not available.
First Published on Oct 4, 2018 08:25 pm