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Last Updated : Oct 04, 2018 08:25 PM IST | Source:

3-point analysis | Savings bank a/c vs payments bank a/c: The pros and cons

Payments banks are aimed at widening penetration of financial services by bringing rural India into the formal banking system.

Moneycontrol News @moneycontrolcom

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:

  1. 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.

  1. 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.

  1. 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.

In conclusion, if you need only basic banking facilities, a payments bank could be a good starting point. However, for advanced banking and financial services opt for a public bank or private sector bank.
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First Published on Oct 4, 2018 08:25 pm
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