“A STUDY ON CUSTOMER’S PERCEPTION TOWARDS

PAYMENT BANKS”

A Project Submitted to
University of Mumbai for partial completion of degree of
Bachelor of Management Studies
Under the Faculty of Commerce

By

Under the guidance of

PROF.

MODERN EDUCATION SOCIET’S

D.G RUPAREL COLLEGE OF ARTS, SCIENCE & COMMERCE
MATUNGA (WEST), MUMBAI-400016
MARCH, 2022

1
 Declaration by learner

I the undersigned Ms.......................d here by, declare that the work embodied in this project
work titled, “A STUDY ON CUSTOMER’S PERCEPTION TOWARDS PAYMENT
BANKS" forms my own contribution to the research work carried out under the guidance
of PROF. ........................is a result of my own research and has not been previously
submitted to any other University for any other Degree/ Diploma to this or any other
University.

Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.

I, here by further declare that all the information provided in the project is true and to the
best of my knowledge.

CERTIFIED BY

________________ _________________
PROF.

DATE:

PLACE:

MODERN EDUCATION SOCIETY’S

2
 THE D.G. RUPAREL COLLEGE OF ARTS, SCIENCE & COMMERCE
Matunga (W), 400016

Certificate

This is to certify that MS has worked and duly completed her Project Work for
the degree of Bachelor of Management Studies under the Faculty of Commerce in the
subject of Finance and her project is entitled, “A study on Customer’s perception towards
Payment Banks” under my supervision.

I further certify that the entire work has been done by the learner under my guidance and
that no part of it has been submitted for any Degree or Diploma of any University.

It is her own work and facts reported by her personal findings and investigation.

             _________________________                                  _____________________
         PROF.                               EXTERNAL EXAMINER
                  PROJECT GUIDE        

            ___________________                                                   _____________________
      DR. NEETA TATKE        COLLEGE SEAL 
                VICE PRINCIPAL 

    Date of Submission:  ___/___/_____

Acknowledgement

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To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.

I would like to thank my I/C Principal, Dr. Dilip Maske for providing the necessary facilities
required for completion of this project

I take opportunity to thank our Coordinator Dr. Neeta Tatke for her moral support and
guidance.

I would like to express my sincere gratitude towards my project Mentor Prof. whose
guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books and
magazines related to my project.

I would also like to thank my Parents and Peers, without their support I won’t be able to
complete my project.

Last but not the least, I would like to sincere thanks to all those people who have left
unmentioned here, but have helped me directly or indirectly by their contribution to give me a
sharp and rewarding insight about the successful completion of this project.

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 INDEX
CHAPTER TITLE PAGE NO.

EXCECUTIVE SUMMARY 7
1 INTRODUCTION 9
1.1 What is Payment Banks? 9
1.2 History of Payment Banks 10
1.3 Payment Banks guidelines by RBI 12
1.4 Features of Payment Banks 13
1.5 Services Payment Banks can offer 13
1.6 Services Payment Banks cannot offer 14
1.7 How to Payment Banks make money 15
1.8 Expected benefits from Payment Banks 16
1.9 Payment Banks in Financial inclusion 17
1.10 Risk faced by the Payment Banks 19
1.11 Opportunities for Payment Banks 19
1.12 Payment Banks- Issues and Challenges 20
1.13 Comparison between Payment Banks, Pre-paid Instrument
(PPI) and Commercial Banks. 21
1.14 List of best Payment Banks in India 2022 22
1.15 Best Payment Banks in India 2022 23

1) Airtel Payment bank

2) India Post Payment Bank
3) Fino Payment Bank
4) PayTm Payment Bank
5) NSDL Payment Bank
6) Jio Payment Bank
1.16 Eligible Promoters 32
1.17 Deployment of Funds 33
1.18 Promoter’s Contribution 33

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1.19 Foreign Shareholding 34
1.20 Voting rights & Transfer/ Acquisition of shares 34
1.21 Prudential norms 34
1.22 Performance of Payment banks 35
1.23 The Struggle journey of Payment Banks 36
1.24 Future of Payment Banks 37
1.25 5 ways Payment Banks will change Indian Banking Space 40
1.26 Payment Banks-The Global Scenario 41

2 RESEARCH METHODOLOGY 43
2.1 Objective of the study 44
2.2 Scope of the study 44
2.3 Limitations of the study 45
2.4 Need of the study 45
2.5 Research Design 46
2.6 Sources of Data 46
2.7 Sampling Design 47

3 LITERATURE REVIEW 49

4 DATA ANALYSIS, INTERPRETATION & 75

PRESENTATION

5 CONCLUSIONS AND SUGGESTIONS 89

6 BIBLIOGRAPHY 93

7 APPENDIX 94

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 EXCECUTIVE SUMMARY

Today, Indian banks are working under intense competition from new generation banks and
foreign banks. It is due to advancement of information technology which makes the dramatic
changes in the banking industry. In India a vast majority of 61% of the rural population is still
not covered under the formal banking system. So, to include them in financial system the RBI set
up a committee headed by MR Nachiket Mor.

The payments banks demonstrate a new market-driven approach to achieving the policy goal of
financial inclusion. Most transactions in India are still conducted in cash, and mobile technology
could lead a shift to digital transactions.

By this, customers are becoming very demanding and it is the extensive use of technology that
enables banks to satisfy adequately the requirement of customers by adding a degree of variation
in the services provided by the banks with the emergence of Payments Banks services. So, it
becomes necessary to study the nature, features and extent of Payment Banks services and their
impact on the operational performance and service quality.

Despite the increasing importance of Payment Banks services, the research pertaining to
Payment Banks in Indian context has been limited. In this reference the present study attempted
to analyze the awareness and satisfaction level of customers towards Payments Banks. It is a
modest attempt to see the changes taking place after Payments Banks and to know about
customers’ awareness and satisfaction regarding Payments Banks. Data frame for the study is
2017-18 to 2021-22.

The study is based on pooled data. It is related to primary and secondary data which is collected
with the help of well drafted and pre-tested questionnaire. Multistage random sampling
technique is used to select customers of the payments banks and this made the selected sample
more representative of the universe.

The study is based on tabular technique of analysis. The study concluded that changes in banking
sector through Payments Banks assure achievement of twin objectives that stability and growth.
The use of all Payments Banks service including NEFT, Mobile banking, ATMs, POS, Debit
Card, Credit Card and RTGS is increasing day by day because information technology in
banking sector has put its everlasting impact on Indian banking.

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Payments Bank in India has made banking services more accurate, precise and comprehensive.
It has been found that maximum customers prefer use Payments Bank products and services
because of convenient nature followed by 24x7 days service, safety & reliability and instant alert
massage. Some people do not use Payment Banks services because they have no knowledge
about technology and its use followed by time issues, hacking problem, frequent disruption of
site and operating cost.

By comparing two strategies, it became clear that the payments banks will need to pursue
ecosystem opportunities and adjacent revenue streams (digital credit, insurance, and merchant
payments) in addition to basic payments and savings services (the base strategy), to advance
profitability and ensure viability in the long term.

The payments bank pursuing adjacent revenue streams reaches operational profitability in year
six and an EBITDA margin of 20% in year ten (up from 12%). Adjacent revenue streams
introduce slightly higher up front capital requirements, but overall, the capital infusion needed
from investors decreases (to INR 850 Cr or USD 126 M over a nine year period).

Adjacent products are expected to generate additional benefits, such as increase in digital
transactions to pay loan instalments or premiums that translate into a more active customer base
and higher circulating balances.

In addition, payments banks are expected to benefit from the accelerating provision and use of
interoperable digital payments economy-wide. The positive network effect is expected to support
increased scale and digital transaction activity for the payments banks and is estimated to
advance profitability to as early as year five.

After the comparison of four payment banks that is Airtel Payments Bank, Paytm Payments
Bank, India Post Payments Bank and Fino Payments Bank. 84.7 percent of respondents are of the
opinion that Paytm payments bank provide the best services in terms of recharge, ticket booking,
commercial bills (shopping etc.), house utility bills, LPG, hotel booking, insurance premium,
transfer of funds, FASTag,. Payments Banks has bought sea-change in Indian banking industry
but still much has to be done to ensure level playing field and compete with foreign players

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 CHAPTER 1
INTRODUCTION

1.1 What is Payment Banks?

The Indian financial system has witnessed some remarkable changes since 1991. Banking
sector is one sector which has been performing really well after liberalization, and
success can truly be associated with major banking reforms taken by RBI some major
technological changes that have taken place over years. Financial inclusion is the delivery
of financial services at a minimum cost to the lower income segments of society in
comparsion to financial exclusion where those services are not available.

Around 2 billion of world’s population have no access to various types of financial

services which are provided by different financial institutions like Banks, Mutual funds,
Life insurance companies. A payments bank is like any other bank, but operating on a
smaller scale without involving any credit risk. In simple words, it can carry out most
banking operations but can't advance loans or issue credit cards. Payments banks is a
different bank that will undertake only certain restricted banking functions that the
Banking Regulation Act 1949 allows best Internet Banking and functions correspondent
of other banks. Payment Banks are a type of differentiated bank introduced by Reserve
Bank of India (RBI) for promoting financial inclusion and facilitating payments and
remittance flows.
They are different types of Banks compared to the conventional universal banks as the
Payment Banks can concentrate in only two types of activities –

Accepting demand deposits and facilitating payments. RBI also allowed Small Finance
Banks for supporting financial inclusion. They have slightly different activities and
regulations. The RBI has made extensive guidelines for the licensing, regulations and

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 product delivery of Payment Banks though it’s circular in July 2014. In August 2015,
RBI has published the list of 11 Payments Bank candidates.

Payment Banks are a new model of banks computer. It is set by Reserve Bank of India.
These Banks cannot issue loan and credit cards. Both current account and savings
account can be operated by such bank account. Payment banks are any other bank, but
operating on a smaller scale without involving any credit risk. In simple words, it can
carry most banking operations but can’t advice loans or issue credit cards. It can accept
demand deposits up to RS 1 Lakh. Payments Bank a bank which will reach Indian
customer mainly to mobile phones rather than traditional bank branches. It can also be
referred as a Mobile wallet. However, they can be also having physical branches. Not
anyone can ask for the license of the banks. One must fulfil condition-One of them being
is that the minimum capital required is rupees 100 crore to open up a Payment Bank.

1.2 History of Payment Banks

On 23 September 2013, Committee on Comprehensive Financial Services for Small Businesses

and Low Income Households, headed by Nachiket Mor, was formed by the RBI. On 7 January
2014, the Nachiket Mor committee submitted its final report.

Among its various recommendations, it recommended the formation of a new category of bank
called payments bank. On 17 July 2014, the RBI released the draft guidelines for payment banks,
seeking comments for interested entities and the general public. 

On 27 November, RBI released the final guidelines for payment banks. In February 2015, RBI
released the list of entities which had applied for a payments bank license. There were 41
applicants. It was also announced that an external advisory committee (EAC) headed by
Nachiket Mor would evaluate the license applications.

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 On 28 February 2015, during the presentation of the Budget it was announced that India
Post will use its large network to run payments bank. The external advisory committee headed by
Nachiket Mor submitted its findings on 6 July 2015. The applicant entities were examined for
their financial track record and governance issues. 

On 19 August 2015, the Reserve Bank of India gave "in-principle" licenses to eleven entities to
launch payments banks. The "in-principle" license was valid for 18 months within which the
entities must fulfil the requirements and they were not allowed to engage in banking activities
within the period.

The RBI will grant full licenses under Section 22 of the Banking Regulation Act, 1949, after it is
satisfied that the conditions have been fulfilled.

March 2019 witness, Paytm account for over 19% of all mobile-banking transactions while
Airtel's Payments Bank contributed more than 5% to the 867 million transactions made during
the month.

In contrast, State Bank of India (SBI), the largest lender in the country by assets, recorded 145
million transactions, accounting for under 17%.

The only banks ahead of Airtel Payments Bank are SBI and the three largest private-sector banks
– HDFC Bank, ICICI Bank and Axis Bank.

Indeed, ICICI Bank saw close to 60 million mobile-banking transactions in March 2019 though
it was just a whisker ahead of Airtel, with under 7% of the market. Paytm Payments Bank and
Airtel Payments Bank together command over 88% of the deposits in payment banks in India in
2018.

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According to the Reserve Bank of India's report on ‘Trend and progress of Banking in India
2017-2018', the payment banks reported losses in the financial year 2017-2018, after a weak
performance in the FY 2016-17.

1.3 PAYMENT BANKS GUIDELINES BY RBI

RBI has spelled out clear guidelines for payment banks. While it is expected that these guidelines
would evolve the coming years the following is what has been laid out as the initial set of
guidelines.

 Minimum entry capital for the payment banks is fixed at Rs.100 crores. The committee
had be recommended an amount of Rs.50 Crores but it seems to be that RBI has chosen
to play safe and doubled the amount.
 This high amount of initial capital would remain that innovation would be slow because
the risk to the payment banks model is very limited.
 Payment banks can accept the demand deposits. The restriction therein is that maximum
balance per customer can only be Rs.1,00,000. This can be for the both current and
savings accounts.
 All deposits have to be invested in government bills and securities, thereby indicating
that the fee income for transaction is what would be probably be the biggest revenue
driver for payment banks.
 Payment banks would be primarily provide the remittance and the payment services.
 The boundary condition here is that the total credits into an account should not be more
than Rs.1,00,000.
 Means that payment banks would only make a sense to lower economic strata of the
Indian banked and unbanked population.
 Payment banks must be the banking correspondent of commercial banks where they can
offer a services like marketing of bank’s loan products etc.
 Commercial banks can also the leverage. This model by the launching a payment bank
subsidiary.
 Currently RBI has not talked about the pricing for the services of the payment banks.
 Payment banks “Internet only” it is a very interesting proposition and it can remains to
be seen if this is the path that the India’s first digital bank would take.

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1.4 Features of Payment Banks.

1. Payment banks can also accept demand deposits (only current account & savings accounts)
with a ceiling limit of Rs.1 lakh per customer.

2. Payment banks must pay interest at the rate notified by the RBI.

3. Payment banks can issue debit cards but not credit cards.

4. Payment banks cannot engage in lending services i.e. they cannot provide loans, thus by
phasing out the fear of NPA.

5. The deposit up to Rs.1 lakh is insured by the DICGC (Deposit Insurance and Credit Guarantee
Corporation) same as in bank account.

6. Payment banks cannot involve in any kind of credit risk and can only invest in less than one
year G-Secs or treasury bills.

7. Payment bank will charge fee as a commission. This will be the sole earning for the banks.

8. Payment banks will also have to maintain CRR (cash reserve ratio) just like other scheduled
commercial banks (SBI, PNB, BOB, Dena, ICICI etc).

1.5 Services Payment Banks can offer

 A payment bank can accept deposits up to a maximum of Rs.1 lakh only per individual
customer.

 Demand deposits and saving bank deposits can be accepted from individuals, small
firms and other entities.

 You can open a savings bank account or a current account with these payment banks.
Payment banks pay interest on the deposits just like normal banks.

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  Payment banks are allowed to transfer payment through any channels like branches,
Automated Teller Machines (ATM), business correspondents etc.

 Payment banks can issue debit cards/ ATM cards to its customers.

 Mobile banking can be accessed through these payment banks.

 Internet banking services can be provided by a payment bank that includes payment
mechanism as approved by RBI such as RTGS/NEFT/IMPS.

 A payment bank app can be used to make utility bill payment as well.

 A payment bank can involve in the providing basic financial services be like accesses to
mutual funds, the insurance products, the pension products and forex services subject to
conditions set by the RBI.

1.6 Services Payment Banks cannot offer

 As per RBI guidelines, these payment banks cannot issue credit cards.

 Payment bank cannot deal any kind of lending business i.e. they are not allowed to
issue any kinds of loans like personal loans or any other loans to their customers.

 Payment banks cannot accept deposits from Non Resident Indians or NRIs.

 They are not allowed to setup subsidiaries for undertaking non-banking financial
services.

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1.7 How do Payments Bank make money

Unlike commercial banks, payments bank cannot earn by lending money. However, payments
banks make money through the following activities:

1) Interest Arbitrage-

Payments bank makes money by depositing the money with some other bank and/or
government deposits which provides interest rates greater than that is provided by the
payments bank. For example, a payment bank which is offering interest at 6% can deposit
the money at a bank or a government deposit which offer more than 6% interest rate. This
is usually done by companies dealing in prepaid wallet services which invest the
deposited money in an escrow account at a partner bank.

2) Transaction Cost-

Payments banks charge customers a certain percentage of their transaction value. For
instance, Airtel Payments bank charges ₹5-25 if the transacted amount is between ₹10
and ₹4,000 and 0.65% of the withdrawal amount if it is above ₹4000.

Many other services bear a charge as well.

3) Cross-selling and Bank correspondents-

Payments bank cannot lend or open a subsidiary to lend money. Hence, they partner with
other organization to sell their products (insurance, investments, etc.) and make money
with it.

Payments banks also tie-up with existing banks to sell their loan services.

4) POS and MDR Just like commercial banks, payment banks makes money as commission
from transactions through the point of sales terminals and resultant MDR (Merchant
Discount Rate).

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1.8 EXPECTED BENEFITS FROM PAYMENT BANKS

A. The primary objective of introducing payment bank in India is to ensure and enhance
financial inclusion of unbanked and under banked population.

B. Small business, unorganized sector, low income households, farm and migrant
workforce would largely benefit by introduction of payment banks.

C. These people usually require transactions of small amounts and payment bank address
this needs.

D. Payment bank may also become a mechanism through which cash benefits from the
government can reach the ultimate beneficiary.

E. They can be useful for transferring wages, subsidiaries or other social welfare
schemes.

F. Operations of payment banks would not lead to microeconomics benefits to the

recipients, but macroeconomics benefit to region also.

G. It will assist in growth and development of the area because of the access to basic
banking services. It would also inspire the much needed saving habits through banking
sector especially in the rural areas because of the ease of accessibility.

H. They will not bring more money into the banking system, but also increase the
competition among banking institutions. The increased competition among banks would
lead to further improvement in the efficiency.

I. Lower cost of operations would exert pressure on other full fledged commercial banks
to refrain from costly payment structure involving physical locations and tangible assets.

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 J. The other commercial banks might be motivated to rely technology based low cost
payment system bringing exponential growth in banking inclusion services. This would
increase inclusion of both cash-addicted as well as cashless-preferring bank customers.

K. The competition for state owned banks will intensify as payment banks are backed by
digital platforms, adequate capital, zero legacy issues and higher rate of interest on
deposits in near future (bandyopadhyay, 2016)

. L. Low cost, innovative and convenient services would compete heavily for business in
rural and semi-urban areas where eventually the ultimate beneficiary would be the
common people.

M. Since payment banks are allowed to invest in government securities only, the risks are
minimized when compared to other financial institutions.

1.9 PAYMENT BANKS IN FINANCIAL INCLUSION

Payment banks role is also very important when considered from the perspective of
financial inclusion:

 M-Banking- Someone could fill cash into an m-commerce bank account in one
place, and who holds the debit card could withdraw cash from any ATM
frictionless from any other place.

Even cash withdrawn or pay in a more rural location, through any point of sale
terminal with a” business correspondent”, essentially an authorized partner for
the banks.

It’s these partners and theoretically the small convenience shop in a village that
sells mobile recharges, Kirana shops, fruit shop could be among them that will

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 serve the purpose of bank branches, through the payment banks can set up
branches if the want. The Department Of Posts.

 The Department of post-Is also important for that same reason – the department of
post can reach every village, and connect farmers to banks.

Think of huge number of government subsidies and cash programs that are meant
to encourage development in villages, and consider how, to access these
payments, villagers would have to travel for hours to nearby cities in order to visit
a bank branch , where the experience was frequently alienating.

Instead, the friendly postman you meet every day could be your banking
relationship manager. Indian post has about 1,54,000 post offices, of them 90%
are in rural areas. There is one post office for every 7176 people in India.

India post also has 2,96,000 agents in the rural area. About 2.2 crore people,
already 163 | P a g e receive their National Rural Employment Guarantee Act
(NREGA) payments by the post offices.

After State Bank of India, India post has the largest deposits valued at Rs.6 lakh
crore.

They can originate credit and allow it to mature, or securitize and turn it into a
market-linked instrument. This could accelerate credit formalization.

We must remind ourselves that there is no one-size-fits-all solution to achieve

complete financial inclusion for the diversified needs of our people.

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1.10 RISK FACED BY THE PAYMENTS BANKS
Due to the increase in web-based online banking services, the activity of fraud, thefts and various
other threats of similar nature has been increased day by day.

To minimize the same, Reserve Bank of India issued Vision documents titled Payment and
Settlement Systems in India:

Vision – 2019-2021 on May 15, 2019. Moreover, people should know about lawful/legitimate
and unlawful/illegitimate banking practices during the online banking operations. The following
are the risks involve during the online/digital tractions through payments banks: -
 Theft of User ID/User Name, Password, virus attacks, hacking, unauthorized access and
fraudulent transactions, due to the open nature of the Internet, Incorrect transaction processing.
 Increases the legal risk, due to lot of uncertainty and ambiguity of certain laws and rules
related to the Payments Banks among people at large.
 Resistance of technology, lack of public awareness and resistance of modern money based
platform is other associated risks, this leads to the financial costs in the banking operations, when
mobile based money platform is used.

1.11 OPPORTUNITIES FOR PAYMENTS BANKS

 Tapped unbanked populations by using whole segment on the basis of both demography and
geography and to offer quality products to their prospective customers with ease and secure
transactions.

 Offering high rate of interests similar to the fixed deposits rate on the saving.

 Provide higher level of technology comfort and attracts merchants, small traders and customers at
large by offering cash back and discounts, leads to generation in the economy.

 To reduce gap between the services and implementations, payments banks provide financial advisory
to their customers about banking operations.

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1.12 PAYMENT BANKS-ISSUES AND CHANLLENGES

 Small town and rural area citizens find difficult to participate in this banking operations, due to
non-awareness of technology advancement and payment system, which leads to the tech-savvy
citizens.

 These banks are not allowed to lend money, hence no earned interest as income. For income,
these banks depend on other sources of profitability.

 Stiff completion and major threat from conventional commercial banks and mobile wallets, as
these banks are also providing payments banks products and services in order to facilitate their
customers.

 Lack of awareness about the products and services of the payments banks among the people at
large.  Lack of 24x7 electricity facilities and internet services are another constraint to operate
banking operations in the remote and rural areas.

 Less broadband internet connections and Internet connectivity with speed in the remote and
rural area, as these banks have no physical presence and speed is essential for operations.

 Although demonization paves a way to make digital payments and transaction, but even till
date, people are not ready to do any operations through digital transactions.

 Lack of incentives for agents, lack of infrastructure Lack of customer awareness and
technological issues are some of the challenges.

 The staff needs extensive training in handling the banking products - especially insurance and
pension products - as they are different from the current financial products in India Post’s
portfolio. The real success will depend on the implementation of technology and staff's
adaptation to new technology.

 Due to low financial and digital literacy among rural masses, they might be discouraged to opt
for formal financial services under Indian Post Payments Bank (IPPB).

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1.13 Comparison Between Payment Banks, Prepaid Instrument (PPI) and
Commercial Banks.

SYSTEMS CAN GIVE CAN ACCEPT CAN MAKE CAN OFFER

LOANS? DEPOSITS? PAYMENTS? INT ON
DEPOSITS?

COMMERCIAL
BANKS YES YES YES YES
(SBI, PNB)

PAYMENTS NO YES YES YES

BANKS

PREPAID
INSTUMENTS NO YES YES NO

PAYMENT
NETWORK
OPERATOR NO NO YES NO
( VISA, MASTER
CARD)

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 1.14 List of Best Payments Bank In India 2022
Here is the list of 11 applicants who got approval from RBI to open a payment bank in India.
1. Airtel M Commerce Services Limited
2. Aditya Birla Nuvo Limited ( Idea Cellular)
3. Fino Paytech Limited
4. Reliance Industries
5. National Securities Depository Limited (NSDL)
6. Department of Posts (India Post)
7. PayTm
8. Cholamandalam Distribution Service Limited
9. Sun Pharma
10. Tech Mahindra Limited
11. Vodafone M-Pesa Limited

Out of these 11 Payment Bank Licensee’s 3 surrendered their license to RBI. Those are:

1) Sun Pharma

2) Tech Mahindra

3) Cholamandalam Distribution services

Aditya Birla Ltd. Discontinued its payment bank operations from 26th July 2019. Vodafone M-
Pesa Ltd. Didn’t start its payment bank owing to complications. Aditya Birla Idea Payments
Bank (ABIPBL) has decided to close down only 17 months into operations. The bank said the
closure was prompted by “unanticipated developments in the business landscape that have
made the economic model unviable

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1.15 Best Payment Banks in India 2022

1. Airtel Payment Bank

Airtel took the credit to start India’s first payment bank in November 2016. Initially, Airtel
offered an amazing interest rate of 7.2% on savings accounts along with 0.65% charges on
withdrawal of amount more than Rs. 4,000. But now Airtel has reduced the interest rate to 4%.
Airtel has wide coverage with more than 5 lakh banking points in India. Let’s look at other
benefits offered by Airtel Payment Banks –

 Earn a 4.0% rate of interest

 Get an online debit card
 Transfer money to any bank account in India through IMPS or UPI
 Get free personal accident insurance cover of Rs 1 Lac
 Deposit cash at any nearest Airtel Banking Point
 Withdraw cash through Airtel banking points or select bank ATMs
 You can buy third party insurance products
 Recharge prepaid mobiles/DTH and pay utility bills.

In September 2017, Airtel Payments Bank launched UPI enabled digital payments to facilitate

secure digital payments. Customers need to link their bank accounts on BHIM before they can
make UPI payments. In July 2019, Airtel Payments Bank partnered with Bharti AXA General
Insurance. Airtel Payments Bank and Bharti Axa Life Insurance have started to provide
government's insurance plan Pradhan Mantri Jeevan Jyoti Bima Yojana in August 2018. In 2019,
Airtel Payments Bank started offering Atal Pension Yojana (a Government of India initiative)
through its platform.

23
2. India Post Payment Banks
India Post Payments Bank, abbreviated as IPPB, is a division of India Post which is under
the ownership of the Department of Post, a department under Ministry of Communications of
the Government of India. Opened in 2018, the bank had acquired about 4 crore customers by
December 2020.
Indian Post Payments Bank (IPPB) was the second live payments bank in India. Since IPPB was
covered by post offices in India, they have a huge network with 1.55 lakhs post offices and 3
lakh plus employees to provide doorstep banking services. IPPB offers ‘Banking at doorstep’
with the help of its big employee network. IPPB also has more than 2 lakh dedicated doorstep
service providers to offer banking services at your home.

Benefits of  IPPB’s Doorstep Banking

 You can experience seamless, digital and convenient account opening at your doorstep.

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  Enjoy safe and secure cash transactions at your doorstep along with 24X7 fund transfer
facility using IPPB app.
 Instant mobile and DTH recharge, water and electricity bill payments.
 You can now access your Aadhaar linked accounts held with other banks. You can opt
the below services:
Cash Withdrawal
Balance Enquiry
Mini Statement
 You can also enjoy Third-party Services like Insurance, Loans, and Investments.

3. Fino Payments Bank

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Founded on April 4, 2017, Fino Payment Bank has made the entire banking process a lot simpler
for common men. The Fino Payment Bank Savings account itself has multiple advantages. If you
have an account in Fino Payment Bank, you know that it is in safe hands. Fino Payments bank
started its services with 410 branches and 25000 banking points in India.

Fino Payments bank has an excellent record of providing excellent services and winning multiple
awards for their hard work. Fino Payment Banks won the Digital Payments Award 2018-19,
ETBFSI Excellence Award and Champion of Rural Market Award for providing outstanding
performance in its domain.

Benefits of Fino Payments Bank are-

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  You can experience seamless money transfers, shopping and withdrawals.
 Sweep in and Sweep out facility to earn more interest up to 7.2%.
 Enjoy safe and secure cash transactions using Fino payments app.
 Instant mobile and DTH recharge, water and electricity bill payments.
 10% cashback on shopping at Vishal mega mart.
 10% discount on shopping at big bazaar.
 Offers from MMT, Bata and Bookmyshow.

4. PayTm Payments Bank

27
Who doesn’t know Paytm in India? The brand name has expanded incredibly since the Digital
India Campaign. Today, almost every smartphone user uses Paytm for financial transactions.

Paytm’s payment bank yet another development where a unique passcode availed to every
customer. This unique code ensures that their money well-protected in the Paytm bank. And the
best part?You can open a savings account with Paytm Payments Bank without any account
opening charges or minimum balance requirements. You can keep up to Rs.2 lakh of deposits
and enjoy several benefits. It lets you receive 2.75% per annum interest on your deposits and
paid every month.

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With Paytm savings account, your phone is your bank. You can enjoy the convenience of
banking from your phone. Paytm payments bank offer cashless payments transaction and provide
minimal banking needs to the unbanked sections of society. Benefits of Paytm Payments Bank-

 You can open zero balance savings account with no worry to maintain monthly average
balance.
 Account opening is simple and completely digital via the paytm app. But you need to
submit documents to complete your KYC at the nearby Paytm point or you can avail this
facility during ride because Paytm has colaborated with Ola, Uber to complete KYC
through their drivers.
 No charges on online fund transfers done via IMPS, UPI or NEFT to another Paytm bank
account or Paytm wallet.
 4% charges on money transfers from wallet to a bank account.

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5. NSDL Payment Bank
NSDL, one of the largest Depositories in the World, established in August 1996 has established a
state-of-the-art infrastructure that handles most of the securities held and settled in
dematerialized form in the Indian capital market.
NSDL Payments Bank Limited has commenced operations as a payments bank with effect from
October 29, 2018. The Reserve Bank has issued a license to the bank under Section 22 (1) of the
Banking Regulation Act, 1949, to carry on the business of payments bank in India.

NSDL Group comprises National Securities Depository Limited (NSDL), NSDL Database
Management Limited (NDML) and NSDL Payments Bank Limited respectively. NDML and
NSDL Payments Bank are two subsidiary companies of National Security Depository Limited
(abbreviated as NSDL). It provides services related to Demat of securities, transfer and
settlement of securities in Indian Securities Market.

NSDL e-Governance Infrastructure Limited is a separate company. It offers services related to

issuance of PAN cards and also acts as central record-keeping agency for National Pension
System (NPS).

NSDL has more than 2.50 Crore demat accounts as on December 31, 2021. These demat account
holders belong to 99.19% of all pin codes in India. Number of certificates eliminated (approx.) is
5,306 Crore. Number of companies in which more than 75% of shares are in demat is 15,962.
The average number of accounts opened per day since November 1996 is 4,378.It contributes to
majority of the settlement in the Indian securities markets and has 90% share in total value assets
held in demat form in India.

6. Jio Payments Bank Limited

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Jio has to be that one brand that appears everywhere. The type of monogamy that Jio has over
the market is remarkable. Jio Payments Bank owned by Reliance Industries Limited.

On August 19, 2015 Reliance Industries received a license to run a payments bank from

the Reserve Bank of India under Section 22 (1) of the Banking Regulation Act, 1949. 

In 2016, the Reserve Bank of India has provided “in-principle” approval to Reliance Industries
Limited to create their Payment Bank. Jio Payments Bank started operating in 2018.
Enjoy banking services through your phone app or at their banking outlets. You can open your
savings account in few minutes without any paperwork. Moreover, there is no minimum balance
requirement for this account.

Jio Payments Bank has restricted services as payments bank. Jio Payments Bank Digital Savings
Account is a paperless, fast, convenient and secure. These are the benefits –

 Your account limit is from Rs. 1 lakh

 Earn interest of 4% on your account balance.
 You can use your Jio Payments Bank account for all your digital banking needs like
instant money transfers, paying bills, recharges, online payments and much more.
 You can even get your free monthly statements, offers and SMS alerts.
 It is easy to view your transaction history directly from your MyJio app.

1.16 Eligible promoters

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The existing non-bank Pre-paid Payment Instrument (PPI) issuers authorized under the
Payment and Settlement Systems Act, 2007 (PSS Act); and other entities such as
individuals / professionals; Non-Banking Finance Companies (NBFCs), corporate BCs,
mobile telephone companies, super-market chains, companies, real sector cooperatives; that
are owned and controlled by residents; and public sector entities may apply to set up
payments banks.

Existing PPI license holders could opt for conversion into payments banks. It is not
mandatory for an existing PPI issuer to apply for a payments bank license and it may
continue as a PPI issuer as per the guidelines issued by RBI from time to time.

A promoter / promoter group can have a Joint Venture with an existing scheduled
commercial bank to set up a payments bank. However, scheduled commercial bank can take
equity stake in a payments bank to the extent permitted under Section 19 (2) of the Banking
Regulation Act, 1949.

If a Government entity desires to set up a payments bank, it should first obtain necessary
approvals from the Government and submit its application.

If the promoter succeeds in obtaining a payments bank license from the RBI after due
process, it would be required to set up the payments bank under a separate corporate
structure unless it is an existing PPI license holder opting for conversion into a payments
bank.

The entities and their Promoters / Promoter Groups as defined in the SEBI (Issue of Capital
& Disclosure Requirements) Regulations, 2009 should be ‘fit and proper’ in order to be
eligible to promote payments banks.

RBI would assess the ‘fit and proper’ status of the applicants and group entities on the basis
of their past record of sound credentials and integrity; financial soundness and successful
track record of at least 5 years professional experience or in running their businesses.

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1.17 Deployment of funds

The payments bank cannot undertake lending activities. Apart from amounts maintained as Cash
Reserve Ratio (CRR) with RBI on its outside demand and time liabilities, it will be required to
invest minimum 75 per cent of its "demand deposit balances" in Government securities/Treasury
Bills with maturity up to one year that are recognized by RBI as eligible securities for
maintenance of Statutory Liquidity Ratio (SLR) and hold maximum 25 per cent in current and
time / fixed deposits with other scheduled commercial banks for operational purposes and
liquidity management. The "balances outstanding under the PPIs issued" by the payments bank
should be flexibly invested / deployed between SLR eligible Government securities/Treasury
Bills and bank deposits (both demand and time) in such a manner that it is able to comply with
the requirements of CRR and SLR on its "overall outside demand and time liabilities" including
its deposit balances and outstanding balances in PPIs issued. The payments bank will participate
in the payment and settlement system and will have access to the inter-bank uncollateralised call
money market and the collateralized repo and CBLO market for purposes of temporary liquidity
management.

1.18 Promoters’ contribution

Since a payments bank cannot undertake lending activities, it is not mandatory for it to have a
diversified ownership structure. Therefore, no maximum shareholding limit for promoters is
prescribed. However, the promoters of the payments bank should hold at least 40 per cent of its
paid-up equity capital for the first five years from the commencement of its business.

If the payments bank is set up as a joint venture with equity partnership with a scheduled
commercial bank, the scheduled commercial banks can take equity stake in a payments bank to
the extent permitted under Section 19 (2) of the Banking Regulation Act, 1949.

When the payments bank reaches the net worth of Rs.500 crore, and therefore becomes
systemically important, diversified ownership and listing will be mandatory within three years of
reaching that net worth.

However, payments banks having net worth of below Rs.500 crore could also get their shares
listed voluntarily, subject to fulfillment of the requirements of the capital markets regulator.
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1.19  Foreign shareholding

The foreign shareholding in the payments bank would be as per the Foreign Direct Investment
(FDI) policy for private sector banks as amended from time to time. As per the current FDI
policy, the aggregate foreign investment in a private sector bank from all sources will be allowed
upto a maximum of 74 per cent of the paid-up capital of the bank At all times, at least 26 per cent
of the paid-up capital will have to be held by residents. In the case of Foreign Institutional
Investors (FIIs) / Foreign Portfolio Investors (FPIs), individual FII / FPI holding is restricted to
below 10 per cent of the total paid-up capital, aggregate limit for all FIIs /FPIs / Qualified
Foreign Investors (QFIs) cannot exceed 24 per cent of the total paid-up capital, which can be
raised to 49 per cent of the total paid-up capital by the bank concerned through a resolution by its
Board of Directors followed by a special resolution to that effect by its General Body. In the case
of NRIs, the individual holding is restricted to 5 per cent of the total paid-up capital both on
repatriation and non-repatriation basis and aggregate limit cannot exceed 10 per cent of the total
paid-up capital both on repatriation and non-repatriation basis. However, Non-Resident Indian
(NRI) holding can be allowed up to 24 per cent of the total paid-up capital both on repatriation
and non-repatriation basis provided the banking company passes a special resolution to that
effect in the General Body.

1.20 Voting rights and transfer/acquisition of shares

As per Section 12 (2) of the Banking Regulation Act, 1949, any shareholder’s voting rights in
private sector banks are capped at 10 per cent. This limit can be raised to 26 per cent in a phased
manner by the RBI. Further, as per Section 12B of the Act ibid, any acquisition of 5 per cent or
more of paid-up share capital in a private sector bank will require prior approval of RBI. This
will also apply to the payments banks.

1.21 Prudential norms

As the payments bank will not have loans and advances in its portfolio, the prudential norms and
regulations of RBI as applicable to loans and advances, will therefore, not apply to it. However,
the payments bank will be exposed to operational risk and should establish a robust operational

34
risk management system. Further, it may face liquidity risk, and therefore is required to follow
RBI’s guidelines on liquidity risk management, to the extent applicable.

1.22 Performance of Payment Bank

The consolidated balance sheet of payments bank for the period 2018-19 implies that their
deposits increase from Rs 438 crore to Rs 883 crore. 
The total capital and reserves also witnessed a marginal increase from Rs 1849 crore to Rs 1868
crore, but other liabilities and provisions has a surmount increase of 61.3% (from Rs 2608 crore
to Rs 4363 crore).Source: Consolidated Balance Sheet of Payments Bank, Off-site returns
(domestic operations), RBI
The huge operating expenses has impacted the overall profits of Payments Bank in 2018-19
though there are improvements in net interest income (from Rs 151.5 crore to Rs 219.4 crore)
and non-interest income.
The high operating expenses is due to the huge initial investment in the infrastructure setup.
There is an increase of Net Loss by 21.56% during this period (from Rs -515.6 crore to Rs -626.8
crore). 
Source: Financial Statement of Payments Bank, Off-site returns (domestic operations), RBI.
Only the Net interest margin improved during this period (from 4.5 to 5.2) whereas losses are
reflected in Return on Assets (from -10.6 to -8.9), Return on Equity (from -27.9 to -34)
etc. Source: Financial Ratio Analysis of Payments Bank, Off-site returns (domestic operations),
RBI
As per RBI, CRISIL Research report October, 2021, in fiscal 2021, overall deposits for payment
bank (excluding India Post Payments Bank) grew by 29% to reach Rs. 43.1 billion. PayTM Bank
deposits had a total deposit of Rs.34.5 billion (excluding FDs with partner banks), whereas Fino
Payment Bank witnessed a growth of 107% on year in deposits to reach Rs. 2.4 billion.India Post
Payments Bank Limited (IPPB), having strong based of 3.5 crore of customers in 650 districts,
has established a full suite of banking operations and made strong linkages and tie-ups with all
supported payment and settlement systems, is now concentrate on pan-India G2C (government-
to-citizen) payments, especially rural DBT (direct benefit transfer) disbursements under the
Pradhan Mantri Garib Kalyan Yojana (PMGKY).
1.23 The Struggle Journey of Payment Bank

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 RBI issued licenses to eleven entities for the establishment of payments bank, but three
have surrendered their licenses before operation and at present only six payments bank
(Airtel Payments Bank, FINO Payments Bank, India Post Payments Bank, Paytm Payments
Bank, JIO Payments Bank, NSDL Payments Bank) are fully operational while rest of them
are either on the verge of folding up their business or running at a limited scale.
The challenges are high operating expenses, low revenue margin and regulatory
issues.The high operating expenses is due to the huge initial investment in the infrastructure
setup as discussed earlier whereas third-party products such as offering credit, insurance
and investment products are only alternate sources of revenue. Income from services like
remittances will also be under pressure as there are already several remittance service
providers in a highly competitive market. Payments Bank need to invest 75% of their
deposits in government securities with maturity up to one year and the balance 25% can be
parked with commercial banks, but the falling yield on one-year g-sec has squeezed their
revenue margin also. Regulatory issues have also impacted these banks a lot. Airtel
Payments Bank was barred to open new accounts by RBI in 2018 due to violation of e-
KYC norms as it has opened accounts of the Airtel subscribers without the consent of
customers. Paytm Payments Bank was prohibited to open new accounts by RBI on similar
grounds. RBI barred FINO Payments Bank from opening any new accounts after it was
found that the latter has violated Rs 1 lakh limit norms in certain accounts. All these banks
are allowed to open accounts in due course of time after the rectifications made by them as
per the RBI regulations. Now FINO Payments Bank has also forged tied up with Suryoday
Small Finance Bank for auto transfers of balances in accounts when it exceeds the limit of
Rs 1 lakh.
Hon’ble Supreme Court's verdict on Aadhaar has impacted the e-KYC process of payments
bank as Aadhaar can only be used for account opening on voluntary basis, whereas the e-
KYC process was based on the Aadhaar authentication system and it has affected the
profitability of these banks as they have built low cost Aadhaar based e-KYC authentication
system. Now, these Payment Banks has built e-KYC architecture apart from Aadhaar.
1.24 Future of the Payment Bank

It can be concluded that based on their performance, Payment Banks have failed to achieve the
objectives of financial inclusion to the unorganised sector entities due to viability issues.

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The future of payment banks is uncertain, and it will take time to expand their business
model. Thus, there should be both regulatory and government support for their sustainability. In
this context following policy directives should be intervened for a holistic growth model.

1. Conversion of Payment Bank to Small Finance Bank (A Future Policy Directives)

As per global findex report 2017(A joint report prepared by World Bank and Bill & Melinda
Gates Foundation), there are still 191 million people without bank accounts in India whereas
there are 1151.44 million wireless subscribers in India as per TRAI report 2019.It has been
projected that smartphone users in India will grow to 34% by 2020(Source-IAMAI Report 2017).

The smartphone is the master key for the internet penetration in rural India. Thus, the internet
penetration growth rate suggests that there is a huge untapped market for Payments Bank in
India, but still Payments Banks are struggling for their sustenance.

On the other hand, M-Shwari’s (a joint venture of Kenya’s Commercial Bank of Africa and
Safaricom, a telecom company which offers a combination of savings and microcredit
products) initiative for digital micro credit facility is a huge success in Kenya. One in five
Kenyan adults have active M-Shwari accounts.

Though M-Shwari has savings account facility, its huge success is due to easy availability of
micro-credit. Since launch, Central Bank of Africa has disbursed 20.6 million loans with a
cumulative loan value of $277 million to 2.8 million unique borrowers with an average ticket
size of $15.

Similarly, India’s financial inclusion agenda was focused on credit right from the independence.
It is only after 2005 that there is a massive shift from credit to the financial access, but savings is
still a daydream for the marginalized and impoverished society who can build their base only

through affordable micro credit and govt. subsidy. Unless the payments bank extends micro
credit facility, it will not of much help to the unbanked population.

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Thus, there is a need for policy intervention for converting payments bank into small finance
bank. The RBI’s present “On Tap Licensing of Small Finance Banks” hold a great promise for
the existing payments banks to apply for the small finance banks.

Payments banks are eligible for on tap licensing of small finance banks (SFBs) after five years of
operation, provided they meet the eligibility criteria. Thus, integration of credit with financial
access in digital ways should be the future model for payments bank.

On-tap Licensing of Small Finance Bank

Enthusiastic with the performance of the Small Finance Banks, RBI has put forward the draft
guidelines of the on-tap licensing policy of new small finance bank in its second bi-monthly
monetary policy of 2019-20. As per the guidelines, the bank should be fully technology
compliant in its operation right from its launch. Digital banking initiatives would be the biggest
driver for scale at low cost for Small Finance Bank which are as follows

 New bank can build differentiated model using technology with 80% lower cost of
acquisition through Digital Onboarding Process
 Faster acquisition through Digital BCs running over powerful APIs
 80% lower cost of operations in comparison to the market and build Fintech like model

The minimum paid up equity capital requirement for the establishment of Small Finance Bank is
Rs 200 crore. The bank must maintain a minimum capital adequacy ratio of 15% of its risk
weighted assets (RWA) on a continuous basis.

The promoters must hold a minimum of 40% of the paid-up equity capital of the bank for a
period of five years.

These banks must register as a public limited company under the Companies Act, 2013.They will
be licensed under Section 22 of the Banking Regulation Act, 1949(Source: RBI Guidelines-On
tap licensing of Small Finance Bank)

38
The promoter of a payments bank is eligible to set up a Small Finance Bank, provided that both
banks come under the non-operating financial holding company (NOFHC) structure, according
to the guidelines.

Existing rules do not allow payments banks to lend and deposits are capped at ₹1 lakh per
customer. If these entities get the license of small finance banks, it will give them access to
micro-credit and opportunity for more deposits. This can boost their profitability, which is at
present under pressure.

2. Payments Bank as Subsidiary/Joint Venture of Universal Bank

RBI should evaluate the option of allowing payments bank to be operated as the subsidiary/joint
venture of universal bank such as between the public sector banks and telecom companies to
leverage strong infrastructure, deep pockets and vast network. 

The subsidiary/joint venture should use strong data analytics tools to develop innovative credit
scoring tools for digital lending products from the customer database of payments bank which
will be a win win situation for both the parties.

3. Customer Centric Product Design

The future income of Payments Bank should be from fee income generated by selling financial
products, the transaction fee generated from the merchant payments, cash withdrawal and deposit
charges in the non-base outlets of the bank.

These banks should focus on low cost eKYC customer onboarding process.

Payments Bank should make smart segmentation of the customer both geographically and
demographically and develop tailor made products for farmers, small business holders, women,
students etc.

Thus, Government as well as policy regulator RBI should come up with appropriate policy for
the long-term sustainability of Payments Bank.

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 1.25 5 ways payments banks will change Indian banking space

1. MORE COMPETITION FOR UNIVERSAL BANKS: Payments banks will be a new

category of banks which will focus on deposit mobilization and payments or transaction services
like payment of utility bills, mobile recharge, remittances, ticketing etc. The current lot of
universal banks can do these transactions too, but their focus on corporate and retail loans keeps
them away. But now with payments banks, they are likely to feel threatened.
2. ACHIEVE FINANCIAL INCLUSION OBJECTIVES: Despite making it mandatory for
universal banks to open rural branches and priority sector lending, along with other forms of
banks like co-operative banks, regional rural banks, almost half of the population is still
unbanked. The payments bank, a stripped down version, can help address the problem as
regulatory requirement for capital is also relaxed and they can use technology to offer low-cost
solutions.
3. ENCOURAGE DIGITAL PAYMENTS: Most of the payments bank candidates came with a
background of mobile wallets. They have been offering a closed or a semi-closed wallet with a
tie-up with licensed bank to offer small payments like paying utility bills, mobile recharge, taxi
payments, remittances etc. With RBI now licensing them to start a bank, they will be able to
offer the same or more such services at lower costs.
4. REDUCE STATUTORY LIQUIDITY RATIO (SLR) BURDEN ON COMMERCIAL
BANKS: Unlike in the west, there is a heavy burden on Indian banks to park 21.50 per cent of
their funds or deposits in SLR. The limit is too high and restricts banks' ability to lend to the
productive sectors of the economy. While this gives the government a ready market for
borrowing, this encourages lazy banking. With payments banks, this scenario would change if
they become successful. By definition, payments banks are allowed to accept deposits, but not
lend. They have to compulsorily invest in government securities. If payments bank becomes
successful and large, the government's G-sec requirement will be absorbed by them, removing
the burden on commercial banks.   
5. CHECK ON BLACK MONEY: India is predominantly a cash economy. This creates a major
hurdle for government or regulators to catch the offenders. The digital cash will create electronic
footprints, which will help the tax authorities go after the evaders.

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1.26 PAYMENTS BANKS—THE GLOBAL SCENARIO

Hughes N. and Lonie, S. (2007) mentioned that the concept of payments banks is based on the
prepaid mobile instruments which is already working well in many parts of world especially in
developing countries e.g., M-Pesa in Africa. Johnson S. & Arnold S. (2012) described one of the
highly cited success stories is that of Kenya where Vodafone’s M-Pesa has become a huge
success. Vodafone, Safaricom and International Business Machines Corporation (IBM) in 2006
introduced M-Pesa. Jack W. and Suri T. (2011) over $1 billion worth of M-Pesa transactions
happen every month and there are over $13 million active users (Development Policy Review
2012). The scale of success can be understood by the fact that more than 25 percent of the
Kenyan GDP is routed through M-Pesa and that more than 75 percent of the Kenyan population
is using it. Moreover, Safaricom and Vodafone revenue are more than 20% of from M-Pesa
system. Mbiti and Weil (2011) agreed that the system mobile phones are used for electronic
payments, deposits and withdrawals.
For depositing and withdrawing cash, through electronic wallet at a network of retail agents,
which are small grocery or other shops. Once money is in their account they can use mobile
phone for payments of bills, buying anytime etc. Mas & Radcliffe D. (2012) has seen similar
success of this system is also seen in Tanzania, where more than 5 million people do transactions
worth $1.5 billion using the M-Pesa system.
According to Llanto M. and Rosellon D. (2018) similar systems are found at other places too e.g.
in Philippines ‘Smart Money’ offered by Banco De Oro (BDO) which is a person to person
transfer system using mobile technology has become quite popular since its start in 2001. The
service is supported by Master Card which is an added advantage and now Apple has also tied up
to offer Apple Pay. More than 6 million people have been using this service and Smart Money
has been termed as a success. Abdul Kaium Masud and SeongMi Bae (2017) agreed that even in
Bangladesh mobile banking service like Bangladesh Rural Advancement Committee (BRAC)
Bank’s subsidiary bKash accounts as well as MCash, launched by Bangladesh’s largest private
bank are becoming hugely popular.
Even in Afghanistan, a similar type of mobile banking service has been launched by the
country’s largest telecommunications company Roshan and Vodafone have launched M-Paisa
and the Ministry of the Interior in Afghanistan have been using it to pay police salaries. The

41
service is gaining acceptance and has currently over a million users. In the over case ponder the
concept of payments bank has been considered which is basically an updated adaptation of
mobile payment framework as of now actualized effectively in African and Asian nations. The
value of global digital payment market size is expecting to grow at a compound annual growth
rate (CAGR) of 19.4 percent from 2021 to 2028, in the year 2020, it was at USD 58.30 billion in
2020 due to adoption of smartphones, rise in e-commerce sales, and improvement in the internet
speed globally.
In February 2019, the Central Bank of Mexico (CBM) launched smartphone payment system,
called CoDi, which is designed to inculcate the habits among people to lessen the use of cash,
which ultimately leads the economy into the financial system, followed by Japanese government,
boosts the subsidy scheme for promoting cashless payments in the country in December, 2019.

As per, this initiative, customers earned shopping points @ Rs.5 percent or more of their
shopping value for employing cashless payment methods. According to the survey conducted by
Epi server, a software company of Austria in 2019 observed that 38% of the U. K customers
choose online system for buying as compared to customers of U.S.A i.e 26 percentage on line
buying habit, followed by customers of Australia i.e 21 percentage, Benelux 22 percentage
Sweden 20 percentage and Germany 20 percentage customers preferred digital system for online
shopping.
As per study conducted by FIS (fidelity information services), which offers and delivers a wide
range of financial products and services in America, in October, 2020 founded that 56% of
clients around the world, were used digital system for making transactions to purchase goods
online and to touch with modernize businesses techniques.
The COVID-19 pandemic was positively impacted the service market growth, which ultimately
increase in online sales and the rise in use of online payment solutions were observed. Customers
across the world have shifted themselves from offline shopping to online shopping during this
pandemic.
In 2020, the payment processing segment, influence the market and reckoned more than 25
percentage shares of the worldwide revenue. The increasing preference for online shopping
globally, is encouraging retailers to adopt online payment processing system to provide
customers with flawless checkout experiences.

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 CHAPTER 2

RESEARCH METHODOLOGY

Research methodology is considered as the nerve of the field work or any project. Without
proper well organized research plan, it is impossible to complete the project and reach to any
conclusion.

The project was based on the survey plan. The main objective of survey was to collect
appropriate data, which work as a box for drawing conclusion and getting result. Therefore,
research methodology is the way to systematically solve the search problem.

Research methodology not only talks of the methods but also logic behind the methods used in
the context of a research study and it explains why a particular method has been used in the
preference of the other methods.

Exploratory research includes the reviewing and analysis of the articles, research papers,
interviews and other published information in order to gain a deeper understanding of the
prevailing scenario.

Research methodology is a way to systematically study the research problem. It explains the
statement of the research problem, objectives, chapter scheme, need, scope, hypothesis, source,
period and sample of study.

Also, the statistical tools and techniques which are used to analyze the data have been discussed.
Indian banking sector tremendously moving towards Digitalization. Payments Banks (PBs) are
making remarkable contribution towards the achievements of objective of financial inclusion.

These banks focus on reaching towards small merchants and low-income group of people. Even
though RBI has taken many initiatives to reach all the sectors of people, to make India, a
cashless economy, the complete knowledge about banking services is very much essential for the
people. The research methodology under the present study is summarized below:

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2.1 OBJECTIVE OF THE STUDY
This study is conducted for the following objectives:

1) To know the perception of people of different age group towards Payment

Banks.
2) To study about the Payment Banks in India
3) To analyze the functions of Payment Banks.
4) To study its effect on Indian Economy.
5) To understand the future of Payment Banks.
6) To study and analyze the level of customer’s awareness regarding
Payment Banks.
7) To know the expectations of customer’s regarding Payments Bank.
8) To know and understand the challenges and obstacle affecting the
development of Payment Banks.
9) To study the service quality provided by the Payment Banks.

10) To study the growth of Payment Banks.

2.2 SCOPE OF THE STUDY

The literature reviews taken for the study are primarily from India. The studies varied from usage
studies to behavioural studies. These were analyzed for the main results.
This is mainly restricted to studies of Payment Banks.

 This Study is about customer’s perception towards Payment Banks.

 This study will cover all the main points which is needed for understanding the topic.
 The scope of study is to get the first-hand information on the topic
Customer’s perception towards Payment Bank.
 The geographical scope of study is limited to areas of Mumbai
Division, which includes Suburban area.
 This study shows and explains the 6 main Payment Banks in India.

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2.3 LIMITATION TO THE STUDY
Although the research has reached its aims, there were some unavoidable limitations. They were
as follows:
 Some respondents gave vague information and were not serious while responding.
 Some respondents were hesitant to reveal information.
 Sufficient amount of data was not available on this topic.
 Many were confused by term Payment Bank. So, it was difficult to get accurate data.
 The research covers only 2 months information
 Study is restricted to Mumbai region only. This information may inconsistent with the
other divisions of Mumbai.
 The study is done in the present environment without foreseeing future developments.

2.4 NEED FOR THE STUDY

Today, Indian banks are working under intense competition due to the entry of new generation of
banks and foreign banks and its modernization in term of advancement in the information
technology.

This makes the dramatic changes in the banking industry, by this, customers are becoming very
demanding. Extensive use of technology enables banks to satisfy the requirements of customers.

Most of the research work was conducted on national and an international level, but awareness
and satisfaction of customers towards products and services provided by the Payments Banks are
not studied much and to know about the dramatic changes in banking industry due to
advancement of information of technology; about the changing needs and desires of customers;
about the awareness and satisfaction levels of customers regarding Payments Banks; about the
preference and non-preference of customer towards Payments Banks in Mumbai, In this
reference, the present study is conducted in Mumbai.

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2.5 RESEARCH DESIGN

The present study is exploratory and descriptive in nature. The present study focused on
customer’s awareness and satisfactions towards products and services provided by the Payments
Banks.

It is related to primary and secondary data which is collected with the help of well drafted and
pre-tested questionnaire. Appropriate statistical method and techniques are adopted.

The nature of the study is statistical pertaining actual environmental conditions.

The reason for choosing this type of data is, qualitative research provides insights and
understanding of problems setting while quantitative research seeks to quantify the data and
typically applies some form of statistical analysis.

2.6 SOURCES OF DATA

Primary Data :

To collect primary data, the study employed survey method because data are collected from
large number of respondents. The primary data is collected with the help of structured
questionnaire and direct personal interview.

Questionnaire consisted of open as well as close ended questions.

Secondary Data :

The present study is based on secondary data. Annual reports of various payments banks;
national and international Journals, Bulletins, Periodicals and newspapers devoted to the subject
of banking in India are also retrieved.

In addition to this, statistical data was also collected from website of the Reserve Bank of India.

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2.7 SAMPLING DESIGN
Sampling is a technique of selecting individual members or a subset of the population to make
statistical inferences from them and estimate characteristics of the whole population. Different
sampling methods are widely used by researchers in market research so that they do not need to
research the entire population to collect actionable insights.

It is also a time-convenient and a cost-effective method and hence forms the basis of any
research design. Sampling techniques can be used in a research survey software for optimum
derivation.

SAMPLING

Sampling unit

The target population must be defined that has to be sampled. The sampling unit of research
included students and professionals residing in Mumbai city.

Sample size

This refers to number of respondents to be selected from the universe to constitute a sample. The
sample size of 110 customers was taken.

Sampling Technique

Convenience Sampling was used to select the sample. Convenient sampling is a non-probability
sampling technique that attempts to obtain a sample of convenient elements .

In case of convenience sampling, the selection of sample depends upon the discretion of the
interviewer.

In this project, Questionnaire Method was used for the collecting the data. With the help of this
method of collecting data, a sample survey was conducted.
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Questionnaire

This is the most popular tool for the data collection. Researcher designed questionnaire
according to the topic and objective of the research project, researcher used three type
questionnaire methods into data collection, i.e.

• Multiple choice questions

• Dichotomous

i. Multiple Questions

Multiple questions researcher used because many options in this kind of questions and easy for
getting response from respondent. Researcher used 16 multiple questions. Questions of this type
offer the respondents an alternative to choose the right answer among others. It is faster, time
saving and less biased. It’s also simplifies the tabulating process.

ii. Dichotomous

Dichotomous question very simple and any one can able to answer that particular question
teenage, young and old. Two dichotomous questions used in this project. These are the questions
which are Boolean in nature. These answers are straightforward and respondent have to answer
them in a straight way. That means the answer can only be either ‘Yes’ or ‘No’.

Tools of Presentation & Analysis:

To analyze the data obtained with the help of questionnaire, following tools were used.

1. Likert scale:

These consist of a number of statements which express either a favorable or unfavorable attitude
towards the given object to which the respondents are asked to react. The respondent responds to
in terms of several degrees of satisfaction or dissatisfaction.

2. Percentage, Bar Graphs and Pie Charts: These tools were used for analysis of data

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 CHAPTER 3

LITERATURE REVIEW

The review of literature related to the concept of Payment Banks, its nature, growth and
dimension for the economic development and financial inclusion in India and the role of the
government for its expansion and development for the same; awareness, satisfaction and
expectations level of the customers’ from the Payment Banks; challenges and obstacles
impacting the development of Payment Banks.; the impact of service quality provided by the
Payment Banks on customer’s satisfaction taken from reputed database such as Sage, Taylor And
Francis, Emerald, Proquest, Springer, Elsevier and Science Direct is studied and reviewed.
Literature review has been bifurcated into two categories: Review of Literature

1- The studies which are conceptual in nature. Review of Literature

2- The studies which are empirical in nature

3.1 SUMMARY OF PREVIOUS STUDIES

Parvathi (2021) focused on the importance of Digital payments during pandemic and share the
role of different modes of digital payment systems. The study was based on secondary data. The
data has been extracted from various sources like research article, authenticated websites,
bulletins of RBI, and Daily’s hence descriptive and quantitative in nature. The study found that
digital payments play a vital role and has many advantages over cash, such as easy transaction,
security and transparency. Banking sector play a key role in digital payment by offering digital
instruments such as debit cards, mobile banking, mobile wallets etc. The study suggested that in
order to aid the recovery and contribute to the emergence of this new standard, it is imperative
that the digital payments environment evolves rapidly and help from the post-Covid period.

Ghosh (2021) explained the impact of adoption of Digital Payment System by consumer. The
study was based on literature review of various author. The study found that the growth in
smartphone and access to internet made life easier for the people and gave advent to
digitalization. The study suggested that the Government of India should have to take the
49
initiative of making rural people aware about digitization. As adoption of technology is always
been low in India compare to other countries.

Sudiksha et al. (2021) Survey based empirical study on digital payments and consumer
experience in India. A sample size of sample of 640 respondents was taken. For the purpose of
this study, primary data was collected by using a structured questionnaire circulated online and
snowball sampling was used. Statistical tools like a multinomial logistic regression for regression
analysis and multinomial logit model was used. The study found that how factors such as
‘perception’ and ‘trust’ in digital payments, and experience with online frauds, effect the
payment behavior of consumers and concluded that a person’s usage of digital payment methods
was influenced by her perception of these instruments, as well as her trust in the overall
payments framework and banking system in general. The study suggested that while
governments, regulators and service-providers are working in synergy to enhance the electronic
payments systems and related infrastructure, although there is a need for awareness among
unbanked and untapped sectors of the society for cashless economy and financial inclusion.

Jyotsna et al. (2020) examined the impact of e-banking service quality on customer satisfaction.
The data was collected through primary resources by using interview method. A sample of 504
customers was taken through random sampling technique. The multiple linear regression, factor
analysis, Kaiser-Meyer-Olkin (KMO) Test and Bartlett’s test of sphericity were applied to
measure the effect of service quality on the customer satisfaction. The study found that most of
banks use e-Banking services by providing better and improved quality products and services to
their customers for their satisfaction. The study suggested that banks should invest huge amount
into the advancement of technology, product innovation, diversification of portfolios and fine
pricing policy to maintain their market share and profitability.

Sudha et al. (2020) examined the different digital payment mechanisms used in the event of a
pandemic based on primary data by gathering data from 220 respondents and the Digital India
initiative is an Indian government flagship program whose vision is to turn India into a digital
society and an information economy. In this futuristic world, all purchases can be made by
contactless cards, smart phone apps and other electronic means. The Reserve Bank of India last
year announced that it planned to raise digital transactions to about 15 percentage of gross

50
domestic product by 2021. The study suggested that the government is looking for a billion and
prioritize automated customer rating (customer credit rating) for lending.

Kolte et al. (2020) studied the positive impact of UPI and BHIM app on digital payment system
and initiative taken by the government of India called digital India for the transparency and quick
services for the people of India. Focused should be made to make digital transactions through
UPI /BHIM app by the users. Primary data was collected from 200 students studying in the Dr.
Babasaheb Ambedkar Marathwada University, Aurangabad. The study found that digital
payment platform by NPCI called UPI and BHIM app there is positive changes in digital
payments and gives more transparency in money transactions. The study suggested NPCI have to
promote native BHIM App as 3rd party apps are more popular among the students and create
online services such as online account opening, savings and more.

Heydar et. al. (2020) studied the Designing Model for Quality Services in Digital Banking. A
sample size of 385 experts with a qualitative and quantitative combination of service security
was taken through structured questionnaire.The quality model of banking services consists of
five dimensions: personalization of services and information, sustainability, service convenience,
security and authentication and innovation of financial and banking services were studied and
analyzed. A digital service quality model was formulated on the basis of review of previous
studies. Standard coefficients, t-test and chi-square test were used as a statistical tool. It was
suggested to improve the speed of the Internet and its infrastructure and provide different ways
of accessing banking services to customers provide a rapid response to the expected customer
service and meet customer needs and expectations and use block-chain technology to enable
businesses to interact and provide services.

Mehta and Shah (2020) focused on identifying factors important for customers to use payment
banks for transaction. The identified dimensions for the usage of payment banks user friendly,
convenience, cost effectiveness; security and easy cash management were considered. The study
found that people look for the aforesaid factors while they transact through payment banks. To
validate the factors and check the model fit, a confirmatory factor analysis was run using analysis
of a moment structures (AMOS). The analysis confirmed constructs convergent validity and
reliability, and model fit. The study suggested that Payment banks must link up with some major

51
financial institutions and provide some sort of offers, discounts, and schemes to increase its
usage.

Singh and Sonalika (2019) evaluated the present conditions of Payment Banks in the financial
exclusion and economic development in India particularly in the weaker and vulnerable sections
of the society at large. The secondary data from Micro Finance Institutions Network (MFIN); the
Insurance Information Bureau of India; index-based data on the RBI and Pradhan Mantri Jan
Dhan Yojana web-sites were used for evaluation and analysis of the study. The finding of the
study was that the Payment Banks in collaboration with RBI could start awareness programs to
reach the untapped customers by opening helpdesks. Further, the study suggested that the Dial-
up toll-free system can be provided by the Payment Bank in rural areas, who have telephone
connectivity but no internet or a smartphone, secondly payment through payment banks should
be accepted for people to actually start using it for transactions in the government authorized
stores or ration shops; Thirdly payment banks should use of quick response (QR) code for the
safety and convenience.

Kokila (2019) identified the awareness and attention level of payment Bank among the faculty
and college students in Bangalore. The data was collected using structured questionnaire method.
The secondary data was collected from existing data sources, catalogues, internet, books,
newspapers magazines and Journals. The stratified random sampling was used for carrying out
the research work. A sample of 200 respondents was studied by gathering the demographic
variables such as age, gender, education. The finding of the study was that Payment banks leads
the Indian economy towards digital and cashless economy as most of the customers are aware
about the Payment banks products and services. Further the study suggested that Government
should create more awareness about the usage of payment banks as customers are expecting
more offers and discounts, reduction in the commission charged; eliminate bugs and make
transactions in a secured manner and more security.

Anjali and Suresh (2019) examined the level of customer awareness and satisfaction on the
Bharat interface for Money (BHIM), an application run on UPI (Unified Payment Interface), a
government’s initiative after demonetization in December 2016 and its factors thereon. The
primary data was collected by taking a sample size of 210 respondents (who were the user of

52
BHIM app) through structured survey method, was taken for the study. The bivariate correlation
and regression statistical tool were used to understand the intensity of relationship between
dependent variables. The dependent variables i.e security, perceived ease of use, customer
service, speed of transaction was also studied to know the customer satisfaction by five-point
Likert scale method. The study found that the factors which can impact the customer satisfaction
are better services, timely responses, speed of transaction, perceived ease of use, security and
customer service. The study suggested that grievance redressal cell of BHIM app. should work
on 24x7 days for the redressal of the complaint of the customers and to enhance their
technological innovations for better efficiency and more security in transactions as many are still
unwilling to adopt and use it.

Saviour (2019) evaluated the customer satisfaction level towards the E-wallet services provided
by PayTM in Noida city. A sample size of 275 customers were taken, who were using PayTM
services. The primary data was collected through direct interview method. The parameters i.e
age, gender, qualification, income along with dependent variables that is Mobile recharging,
Electricity bill payment facility, Water bill payment, Insurance payment, Bus Ticket booking,
Movie Ticket booking, Hotel Room booking, Fund transfer facilities, Software reliability,
Privacy Policy of PayTM and Cash back offer, Respondents facing technical errors, Interest in
shopping with PayTM were taken. The statistical tools that is simple percentage, correlation and
Regression analysis method were used to find out the customers satisfaction and perception on
the services provided by the PayTM Bank. The study found that after the demonetization there is
an expansion of cashless economy and financial inclusion in the economy as the awareness of
Payment Banks. The market value of share of PayTM bank has increased, most of the people are
aware about the product and services of PayTM. The study suggested that PayTM should work
to add more towards availability of auction facility, fund transfer schemes and to extend more
feature for making payment and security on transaction.

Senthil (2019) studied the impact of digital payment systems on customer’s and evaluated the
problems encountered by the users of PayTM or pay u money applications in Dharmapuri
District. A sample size of 167 PayTM users was taken through structured questionnaires based
on convenient sampling. Descriptive research design, Percentage method, Weighted Average
method and Rank correlation method were used for analysis of data. The primary and secondary

53
data was used in this study. The study found that the user of PayTM ranked it 1 st in terms of
convenience facilitates followed by safety and security, anytime and anywhere, add on services,
charges of using PayTM, software issues, reliable, transaction speed and both bank charges and
grievance handling method of PayTM. The study suggested that free awareness seminars and
workshops are to be conducted by the PayTM Bank for the rural population and unbanked area
in India.

Arvind and Manoj (2019) studied the success level of the Indian Post Payment Banks (IPPB)
in the rural & urban areas in India. The secondary data and reports of survey of Pradhan Mantri
Jan Dan Yojana (PMJDY) and RBI web-site information’s were used. The study found that
although IPPB is providing payment bank services to the rural and migrating people, but at
present scenario, most of the people are not aware about payment banks and its functions as
IPPB have been bounded itself mostly in banking operations and does not allow to do a business
of lending activities. The study suggested that as payment banks will be a game changer
considered as payment revolution in banking sectors, if IPPB provides every household in India
an access to efficient banking services and enable them, to become financially secure and
empowered and to spread awareness about their products and services to the unbanked sectors of
the society.

Jain and Singhal (2019) focused on the customers attitude towards adoption of ewallet by
taking banking and non-banking institutions of developed and developing country, engaged in
providing digital transaction services. The sample size of 101 studies, based on quantitative
method and qualitative research techniques were taken into consideration. The data was collected
mainly through secondary resources. Innovation Diffusion Technology (IDT), theories and
models were used to find outs the factors for adoption of digital banking. The study found that
most of the studies conducted worldwide on digital wallet is on population of youth having age
of less than 30, as they adopt e-wallet due to faster technology, security, saving and less time
consuming. This study suggested that banks should make in efforts to decrease the risk and to
spread awareness among masses for increasing the usage of digital banking, which ultimately
touched the objective of digitalization and cashless economy.

54
 Nambiar (2019) studied the role of customer knowledge as a moderator variable between
service quality and customer acquisition leading to their satisfaction level in the Indian banking
sectors. The study is primary and secondary data based. The study is in nature. Percentage
method, weighted average method and rank correlation methods were used. Simple structured
questionnaires distributed to the group of 50 academicians as well as senior-level banking
professionals selected through random sampling method. The study found that perceptions of
service quality positively impacted customer value evaluation Further the study suggested that
banks should provide greater insights to their customers about the usage of banking products and
services and to make analytical research towards the customers’ perceptions of the bank’s
activities meeting their expectations.

Saini (2019) studied the customer’s perception towards the payment banks in the Haryana state.
The data was collected from 200 users of the payment through self-administrated questionnaire.
Mean and standard deviation tools were used to describe the nature of the data and purposed
hypothesis was tested. The study was exploratory t-test and ANOVA. Customer‘s opinion and
beliefs were measured five-point Likert scale. The study revealed that customers using payment
banks are highly satisfied with the services of payments. The study suggested that to main the
satisfaction level of the customers, banks should provide quality of products and services with
easy and low costs along with safety and security feature.

Firdous and Harika (2018) studied the role of M-Banking, Pradhan Mantri Jan-Dhan Yojana
(PMJDY) and Indian Post Payment Banks (IPPB) for the financial inclusion in the economy after
digitalization and did comparative study of traditional banks and payment banks. The secondary
data such as journals at national and international levels, published government reports,
newspapers, and websites of RBI were taken for study. The study was descriptive. Percentage
method, weighted average and rank correlation methods were used. The bivariate correlation and
regression techniques were adopted. The finding of the study was that most of the Indians do not
have access to reach banking facilities and to get government benefits, due to their geographic
locations and belong to the weaker section of society. The study suggested that improvement
should be made in the quality of products and services provided by the Payment Banks to their
customers, which may finally lead results in financial inclusion.

55
Reddy (2018) analyzed the announcement of establishment of Payment Banks License by RBI,
affected the stock performance of Indian commercial banks. The “Capital Asset Pricing Model
(CAPM)” was used as a measurement instrument. Abnormal returns based on market mode are
captured for stock performance of commercial bank. Event study technique is employed to
understand the performance of stocks around the announcement period. Further, the study
founded that announcement of Payment Banks created a serious competition to existing
commercial banks, to adopt new platforms such as UPI for payment services and develop
innovative products to mobilize deposits. Hence, the study concluded that payment banks would
initially target unbanked masses in smaller cities.

Abbigeri and Shettar (2018) examined the impact of digital payment system on the economic
development and financial inclusion in India by studying the uses of various payment
modes/Apps. The study was based on secondary data. Correlation Analysis and ChiSquare
statistical techniques were used. The collected data has been classified into suitable tables for
analysis and interpretation. It was found that after digitalization, the government and RBI moves
towards the adoption of non-cash payment modes. The study suggested that the Government and
RBI should bring transparency and efficiency in the e-payment system, promoting mobile
wallets, withdrawing service charge on cards and digital payments. Spread awareness among
women through campaigns, which will lead to social and digital revolution; Schemes such as
Lucky Grahak Yojana and Digidhan Vyapar Yojana have to be continued to encourage
electronic modes of payment. Hence, such efforts help in growth and development of economy
in India.

Dhanalakshmi and Sarath (2018) studied the growth of PayTM’s bank in India as a Digital
Payment Platform. The secondary data was used to explain the growth of bank. ChiSquare and t-
test methods were applied. The study found that PayTM bank acquired sponsorship rights in the
year 2018 of 8th season of Indian Premier League for five year and served as an associate
sponsor on Sony TV network (which has the telecast rights for IPL) and is the official partner of
the Indian Premier League (IPL) team Mumbai Indians. The bank also tapped the loan market
and is also planning to give WhatsApp, a run for their money by launching a chat app with more
sophisticated features and the latest PayTM success Story is ever expanding with the addition of
e-retail and m-commerce stores. This gives the option to small vendors to list their products on

56
the website and allows them to expand their customer base. The study suggested that PayTM’s
bank should works on digital advancement in the present century, which helps in time utilization.

Suma and Hema (2018) examined the impact of adopting the digital payments by the
consumers of Hyderabad region. A sample size of 200 respondents was taken. Primary data was
collected through simple structured questionnaires method. The parameters such as gender, age,
income, education was taken. The study found that the deployment of technology for digital
payments have improved the performance of banking sector and able to achieve the motive of
cashless economy. The study suggested to create awareness on maximum utilization of
technology. Furthermore, Banks should take effective measures in creating awareness towards
the effective usage of technology and security.

Brahmbhatt (2018) analyzed the customers' perception towards the awareness and satisfaction
from E-wallets in Ahmedabad city. The study was descriptive in nature. Convenience sampling
methods were used to get the information about E-wallet. A structured questionnaire comprising
of 23 questions were designed and circulated among 102 people (sample size) to assess
customers' awareness and satisfaction on E-wallet. A five-point Likert-type scale was used to
find out the satisfaction level. Both primary and secondary data were used for data collection.
Multivariate techniques like ANOVAs, chi-square, t-test were used to test the various
hypotheses. This study framed that the people are aware and willing to make online payments
through E-wallets and there is a tremendous increase in growth rate after demonetization. The
study suggested that word to mouth publicity have higher impact on information spread as
compared to other methods of advertisement. Further the study suggested that companies and
government should create awareness by organizing cashless economy seminars and workshops at
rural and urban areas.

Dhiman (2018) accessed the preference of consumer towards M-wallet and studied the factors
affecting on the choice of M-wallet customers in Surat City. The primary data as well as
secondary data, based on structured questionnaire and five-point Likert scales were taken for the
survey. The sample size of 176 customers was taken. Convenience sampling and quantitative and
qualitative techniques were employed. The statistical tools i.e weighted average mean, kruskal
wallis test and chi-square test were employed. The parameters such as age groups hailing from

57
different socioeconomic background were taken. The factors related to pricing, convenience,
privacy, brand loyalty, and security of transaction, try out new technology and usefulness were
also taken into consideration for assessing the preference of customers on M-Wallet. The finding
of the study was that the awareness of customers of M-wallet is very high in Surat city. Further
the study found that security of transaction and privacy of information were two most important
factors that affect the choice of M-wallet service. The study concluded that the Indian M-wallet
market is expected to grow at a compounded growth rate (CAGR) of 141 percent to reach Rs.
30,000 Crores by the end of 2021-22.

Nazim Sha and Rajeswari (2018) evaluated that impact of PayTM on the acceptance level of
rural and urban areas of customers in Chennai and studied the success of PayTM in motivating
the digitalization and cashless economy. Non probability sampling techniques that is
convenience sampling method was used. A sample of 50 employees (college students, employed
and non-employed youths, middle aged people both employed and non-employed and the
merchants) have been taken. Statistical tools such as percentage analysis, correlation test and chi-
square test were used for data analyzing. Data were collected through primary and secondary
sources. The study found that PayTM is one among the best payment bank, which provides
technical advancement with modern facilitates of payment to the 53 percent rural and urban
customers in Chennai. Further, the study suggested that Payment Banking holders should aware
the rest of the population in Chennai about the role and functioning of payment banks for making
India digital and cashless.

Venkatesan (2018) analyzed the usage of PayTM and studied the satisfaction level of customers
in Madurai city. A sample size of 60 customers of payment bank was selected for the study.
Primary data is collected through well-structured simple questionnaires. The study found that
most of the customers were satisfied with the products and services of the PayTM, furthermore
the study suggested that PayTM should may also works for strengthening its services towards
ease in confirmation of order and to prevent cases of slow server and complete breakdown of
system by having back storages.

Gramopadhye and Samudre (2018) studied the impact of Airtel payment bank as one of the
Unified Payment Interface (UPI) applications on the customers of Sangli Miraj Kupwad

58
Municipal Corporation in Maharashtra. A sample size of 150 customers of Airtel payment bank
was collected by means of face-to-face interviews and well-structured questionnaire. Statistical
tools such as percentage method, chi-square and t-test method were applied. The parameters
were age, gender, qualification, occupation and income of the customers were analyzed. The
study found that the customers of Sangli Miraj Kupwad Municipal Corporation were satisfied
and supporting the products and services of the Airtel Payments Bank. Furthermore, study
suggested that the bank should take necessary action to establish separate department for
resolving the grievance of the customers in term of slow server and service quality.

Poongothai and Ranjith (2018) examined the roles and functions played by the PayTM bank in
terms of supplying their product and services to their customers in Coimbatore city. A sample
size of 230 customers of PayTM was taken through simple questionnaire. Convenience sampling
technique was adopted. The customers were segregated on the basis of their age, frequency of
utilization, cause of utilization and average month-tomonth spending on PayTM. The primary
and secondary data was used for collection of data. Correlation Analysis and Chi-Square
Analysis were used as a statistical method for interpretation. The study found that PayTM
support their customers to transact with the use of their mobile phones with simplest manner and
operating well in terms of digitalization and privateness. The study suggested that PayTM should
offer more discounts and offers on the transaction and gift vouchers to meet the competition in
the payment market and to bring about innovation to growth of consumer satisfaction.

Kumar (2018) studied the consumer’s perception towards mobile wallet apps such as Aitrel,
PayTM and Fino payment bank. The sample size of 350 customers of payment banking
belonging to major cities (Mumbai, Gujrat, West Bangal and Bangalore) was taken for study.
The primary and secondary data was used. The reliability of the questionnaire was checked by
calculating the Cronbach’s Coefficient Alpha value. SPSS, KMO and Bartlett’s test was used for
quantifying the sampling. The study found out the said bank is the major contributor of proving
safe and secure shopping to the consumers. The study suggested that the Payment banks may
moderation its technology and works towards the strengthening of their internet connectivity
which further increase the consumers’ perception and satisfaction level towards the Payment
banks in our country and will march towards the digital India and inclusion of financial inclusion
in the economy.

59
Tanzila and Vaibhav (2018) did comparative study of customer satisfaction on ePayments
appsi.ePayTM/Mobiwick/BHIM/Phonepe apps in the Pune city. A sample size of 400
respondents, who have been using the digital payment modes, was selected. Primary data was
collected through a well-structured questionnaire. The factors that is pricing, consumer behavior,
market share, revenue models and convenience were also studied. Correlation Analysis and Chi-
Square methods were used. After comparative analysis, it was found out that PayTM app has the
maximum market share value in Pune city followed by Phonepe, mobikwick and others in terms
of their products and services. Further, the study suggested that Payment banks apps companies
should promote its services through Media and tie ups with traditional bank to gain maximum
customers.

Sathiyavany and Shivany (2018) did comparative study of the perception of total service
quality and the perception of total satisfaction provided by Payment Banks to their customer’s.
The study was purely based on secondary resources which include magazine, journals, books and
internet. The factors such as buying behavior, customer satisfaction, security and safety, product
quality and services and pricing and offers in the market were also studied as parameters. The
statistical tools such as simple percentage method, correlation analysis, chi-square and t-tests
were used for the same. The study founded that high quality of products and services at
affordable rate with cash back offers interacts customers towards the use of services of payment
banking, which ultimately provides the financial inclusion in the economy and leads the country
towards digital India, hence ultimately achieve the target of perception of total satisfaction of
customers. The study suggested that for achieving the quality perception and to get the total
satisfaction perception, Payment Bank should strengthen its security features and work more on
customer retention and word of mouth satisfaction policy.

Kamble and Afza (2018) did comparative study on the perceptions of customers towards five
Payment Banks namely Airtel, Payment bank, PayTM Payment bank, India Post Payment bank,
Fino Payments bank and Idea Payments bank in Bangalore city. A sample size of 225
respondents were collected through judgmental sampling and structured questionnaire. Seven-
point Likert scale in terms of degree of dissimilarity between two objects was taken. Proximity
Squares Scaling (PROXSCAL) in SPSS17 and multi-dimensional Scaling is used to identify the
difference in payment bank’s perception amongst the customers along with correlation

60
techniques were used. The study found that due to better quality and trust in terms of safety and
security, the PayTM Payment bank is the most trustworthy and high utility providing bank
among customers followed by the Airtel Payment bank, Fino and India Post payment bank. The
study suggested that the rest of the banks should work on the Know your customers (KYC)
norms and increase their network connectivity.

Shilpa and Veena (2018) examined the customers’ satisfaction towards the State Bank of India
(SBI) mobile banking services in Mysuru city. The Primary data was collected through
structured questionnaire from 100 customers of SBI and the secondary data was collected from
research publications, books, journals and periodicals, dailies and annual reports of SBI bank
website A simple random sampling method was used. Statistical technique such as mean,
standard deviation, Mann-Whitney U-Test and Kruskal Wallies ZTest and chi–square test was
used. The parameters that is gender, age, educational background, occupation and Income of the
customers were taken. The study found that the as compared to females, the males and younger
have strongly agreed and positive opinions about the State Bank of India (SBI) mobile banking
services. The study suggested SBI should conduct free seminars and workshops for their
customers to know more technical features about the app and also provides faster services
without networking disturbances.

Choudhury (2018) studied the emergence and need to establish payment bank system along
with opportunities and challenges faced by the concerned Bank. The secondary data was
collected from magazine, journals, books, internet and web-sites of Government of India,
Pradhan Mantri Jan Dan Andolan. The study found out that increasing internet and mobile
penetration is the reason of emergence of Payment banking. Furthermore, low internet speed in
India has become challenge for the growth of these banks. As per survey report of Govt. of India
2018, India’s has 97 out of 149 qualifying countries global ranked in the field of digit payment, a
little behind from China and Indonesia. The study suggested to capture more of the rural
population under the ambit of the formal banking system. After all, this was the key purpose of
setting up the payment’s banks in the first place.

Bhansali et al. (2018) examined the viability and scope of the payment banks in the Indian
economy by owing to the changing perceptions among various segments of the Indian

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population. An exploratory approach was taken to understand the perspective of the different
groups of the target market, which were randomly selected. A sample size of 250 with income up
to Rs. 2000000 and having varied sources of household income was taken by using Clustered
probability sampling method. The quantitative and qualitative data were used for interpretation
and to test the formulated hypotheses. These hypotheses were tested with one way ANOVA,
using SPSS software. The study found out that attractive interest rates, safety and security
provided by the payment banks as compared to stocks and mutual funds can be a great way to
boost financial inclusion of small business owners, migrant workers, people from rural areas, and
other people from low-income groups in an Indian economy. The study suggested that awareness
of products and services of payment banks should be spread among the rural and unbanked
society to the large extend for the financial contribution in the growth of economy of the India.

Srinivas (2017) described the functioning of m-Banking, the Department of Posts, Pradhan
Mantri Jan-Dhan Yojana and the India Post Payments Banks by analyzing the statistical tables
related to banks in India, published by the Reserve Bank of India in June 2016. Simple
Percentage, weighted average and rank correlation methods were used. The study founded that
the usages of Digital Payments are increased, due to advent of electronic payment systems and
emergence of a large number of alternative computers and electronic communications. Further,
the study added that Payment Banks provides a low-cost platform for basic banking services to
every rural or urban citizen who do not have access to banking facilities and cannot avail the
government benefits. Hence the payment banks play an important function for implementing the
government’s direct benefit transfer scheme. The study suggested that M-Banking, PMJDY and
IPPB have to play a vital role for proving all benefits of the government to the un-banked and the
under-banked customers across all cross sections of society and geographies.

Chanderprabha (2017) studied that how payment banks took initiative for setting up bank the
unbanked chunk of Indian population and add benefit to the Indian economy for its cashless
structures and bringing financial inclusion in India. The secondary data were used for studying
the concept and importance of payment bank, the study was descriptive in nature. It was found
that Government of India is conducting various awareness programs through media and
newspaper; imparting free internet access among rural masses and efforts are taken to fill the gap
of digital divide among urban and rural customer’s by taking initiative to encourage more and

62
more people to get attached with the banking system and using innovative and attractive banking
modes and services that leads to not to increase the awareness but ultimately increase the
financial inclusion in India. The study suggested that the Internet literacy need to be promoted
among the rural as well as urban people, due to existence of digital illiteracy and need for
conducting more awareness programs for unbanked population of the rural areas and low-income
households, which are not included by the rural bank branches.

Purohit and Mishra (2017) studied the initiatives taken by Government towards Financial
Inclusion in India with the evaluation of the payment banks. The secondary data was collected
from CRISIL (Credit Rating Information Services of India Limited), published on the web-sites
of RBI (Reserve Bank of India), EPWRF (Economic & Political Weekly Research Foundation)
and report of RBI and World Bank submitted to Government of India on Financial Inclusion.
The study was exploratory and descriptive in nature. The study found that there was less growth
of Financial Inclusion and economic development in the year 2010 to 2015, due to lack of bank
branches; lack of infrastructure and documents and inability to maintain minimum balance
requirement by the weaker sections and low-income groups. The study suggested that to increase
the Financial Inclusion and economic development, the Government should introduce Payment
Banks towards financial inclusion and to trap the unbanked population. Further, it is suggested
that payment banks should prove to be a milestone for covering the unbanked population and
improve financial inclusion.

Sikdar and Kumar (2017) investigated that the ‘Banks are not important but Banking is
essential and analyzed the competitive pressure of Payment Banks on Traditional Banks.
Secondary Data such as information through notices/circular from the Reserve Bank of India
(RBI); views of Perspectives of Chief Executive officers (CEOs), banking practitioners and
banking fraternity were taken for study. The study divided into seven sections viz. financial
inclusion – A reality check, payment banks: A differentiated bank variant, influx of payment
banks: Reactions from the bankers, payment banks – A ray of hope for the marginalized and
excluded, technology enabled customer engagement, impact on commercial banks. The study
concluded that payment banking business model provides full-fledged .Banking service should
be introduced for the enhancement of the financial inclusion in the economy.

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Dhimen (2017) identified the BHIM (UPI) is the most convenient digital payment in the rural
area of Valsad district. A sample size of 100 respondents was taken through structured
questionnaire with convenient sampling method. Data was collected through primary sources
from personal interview of various respondents and secondary data from previous research
studies, journals, magazines and web-sites of the same. The various statistical techniques like
weighted average mean, chi-square test and analysis of variance (ANNOVA) were used to
identify the variability in the responses. The study found the impact of demographical factors on
the selection of digital payment options. The study suggested that BHIM (UPI) was the first
preference of rural customers followed by debit card and free charge. The study concluded that
BHIM/UPI app was most preferred digital payment option of consumer of Valsad city followed
by debit card and free charge.

Mittal et al. (2017) focused on assessing customers’ preference in using services of payment
banks over universal banks in Delhi NCR. A sample of 300 respondents having bank accounts
through non probability sampling techniques such as convenience sampling method was taken.
The parameters i.e gender, age, occupation and qualification of customers were studied. The
Primary as well as secondary data were collected for the study. The responses from the
respondents were analysed by using the simple percentage, chi-square and t-test tests were used
to test the various hypothesis. The study found that convenience or ease in use of technology has
a positive impact on the use of payment banks, but other factors like gender, qualification and
occupation also effect the customer to avail the services of a payment bank. It is suggested that
the mind-set of the customers can be changed with proper promotion and awareness of the
product and services delivered by the payment banks by conducting awareness camps by the
Reserve Bank of India.

Rathod et al. (2017) studied the customers’ awareness about the latest IT-enabled Indian
Payment Banks in the Bangalore City. Primary Data was collected directly by interacting with
the customers by using structured questionnaire method. Secondary Data was collected from the
existing data sources, catalogues, Internet, Magazines and Newspapers. A total number of 135
respondents based on different demographical variables that is age and education-based were
selected. Convenience sampling was adopted. Statistical tools like ANOVA, post-hoc tests were
used. The finding of the study was that Payment Banks should collaborate with banks and

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telecom industries for providing their products and services to the rural and unrecognized
sections of society for the financial inclusion Further the study suggested that companies can
create awareness about the Payment Banks, which helps for digitalized India.

Kiran and Bhanuya (2017) did comparative study of the functioning of Online Banking/e-
Banking (or Internet Banking); Mobile Banking with Payment Banks and studied their impact on
the Indian economy for the same. The data was collected through primary and secondary
sources. A sample size of 173 respondents of Pune city with parameters of age, occupation,
qualification and income were taken for evaluation. Percentage analysis, correlation, chi-square
methods were used. The study found that 60 percent customers of Pune city are adopting
Payment bank services, as the bank offers handsome rate of interest on their saving and
facilitates for the payments of utility bills with intuitive offerings. The study suggested that
customers expecting more offers and discounts, reduction in the commission charged; Eliminate
bugs and make transactions in a secured manner and more security from the Payment Banks,
hence Payment Banks should provide the same.

Nannae (2017) analyzed the problem faced by PayTM users during transactions through their
Smartphone. A sample size of 230 customers was collected through a structured questionnaire
from those who were the user of smart phone. The study was descriptive in nature. Percentage
method, weighted average method were used. The factors that is age, average monthly spending
on PayTM; failure in PayTM transaction; major problems faced during PayTM transactions were
taken as parameters. Five-point Likert Scale was used to test the satisfaction level. The study
found out that due to payment gate way failure, acceptance of debit card/credit card, around 51
percent people faced problem related to recharge, ticket booking, bills payment and shopping.
The study suggested that as PayTM is currently performing well in terms of privacy but it has to
work upon discounts/offers, transaction time and bring about innovation to increase customer
satisfaction.

Siwach (2017) examined the customer opinion about Airtel payment banks (APB) of Jaipur city
in Rajasthan. The sample size was 260 customers of public as well as private sector banks were
taken. Primary data was collected through structured questionnaire. The study was exploratory
and descriptive in nature. The analysis was done based on the quantitative research. Non-

65
Probability and convenience sampling was used. Chi-square test was used to test the hypothesis.
The study found that Airtel Payment bank is positive initiative of a telecom industry as it
provides consistent innovation in the retail industry by providing quality product and services
with affordable rates. The study suggested that Bank should improve the customers’ services by
introducing Airtel Safe Pay app and to provide efficiency in operations, which is needed for
competitive edge in the retail banking business.

Brid and Chandran (2017) did the comparative study of the mobile banking applications like
PayTM, Mobikwik, free charge, e-wallet and studied the satisfaction level of customers using
banking applications in Ahmedabad city. A well-structured questionnaire was circulated to 500
users consisting of students, private employees, businessmen and housewife through google
forms to know their satisfaction level about the above said mobile banking apps. Statistical tools
as simple percentage method, mean, correlation t-test and chi– square test was used. The study
found that students and private employee is the maximum user of mobile banking apps. It was
also identified that PayTM has maximum users followed by free charge, BHIM and Mobikwik as
PayTM offers maximum services than any other mobile applications. The study suggested that
mobile app holders should extend the security and privacy policies of the application and to
spread awareness in the rural and unbanked sectors of the society to make India digital.

Rangaswamy (2017) explained the feature of using Bharat QR code or Quick Response code in
promoting and boosting cashless payments in the economy. The study was based on purely
secondary data which was collected from national, international journals, magazines and through
websites of various mobile banking. The study was exploratory and descriptive in nature. The
study found that QR code-based payment is more secure and provide sense of transparency and
accountability as compared to other mobile banking applications, which is without QR code.
Further, the study suggested there is need of more awareness among the people about the usage
of Bharat QR Code.

Kumar and Kaliash (2017) did comparative study of BHIM Unified Payments Interface (UPI)
app with E-wallet for transferring money. The data was collected through secondary resources
and based on review papers at national and international levels, magazines and e-banking
websites. The study was exploratory and descriptive in nature. It was found that due to current

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installment features of IMPS, MMID and NEFT/RTGS with modern security mechanism on the
BHIM UPI app provides easy mode to the user for transferring money. The study suggested that
Government should conduct free training programs for the people residing in the rural and
unbanked area for awareness of BHIM UPI apps to make cashless and digital economy.

Kahlonetal. (2017) did comparative study of functioning of payment banks and commercial
bank by analyzing the objectives, regulations challenges faced and opportunities grabbed by both
the banks. The study was descriptive in nature and based on secondary data. Percentage method
and Rank correlation method was used. The study found that payments banks provide additional
low-cost service, safety, security and save time to their customers as compared to commercial
banks. The study suggested that commercial banks should bring some changes in their working
process by making some technological advancement to provide similar facilities as provided by
the Payment banks to retain and satisfy their customers. The study concluded that Payment
banking is a way to cashless economy and connecting Indians to banking and at last to
technology driven country.

Shakir and Akhtar (2017) reviewed the factors that impact digital transactions in rural
economy. A sample size of 250 merchants and customers of rural segments, who used digital
payment solutions were selected. Both primary and secondary data were used for the study. The
survey was based on Pre & Post Demonetization trend of Digital Payments. Regression analysis
Chi-Square and t-test were used. The study found that around 60 percent merchants and
customers do not accept Digital payment due to fear of security and safety features in
transactions. The study suggested that Government should reduce the complexities in the end-of-
day settlement process and to reduce the transaction charges over the digital payments for the
merchants to address macro challenges, business limitations and consumer related issues for the
potential developments efforts towards Digital Economy.

Garg and Kapoor (2017) reviewed the institutional and policy framework for payment banks
for the financial inclusion in the Indian economy as compared to other countries. The review of
the previous studies was taken to identify major bottlenecks for the newly established entities.
The study found that regulators and policymakers should assist in developing a framework to
allow non-banks to offer payment / remittance services only that is progressive for all the

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stakeholders like European Union, Japan and South Africa and Pakistan, Tameer Bank and
mobile operator Telenor offer a mobile banking service called Easy Paisa. Further the study
suggested that plan of expansion in villages under-banked population of the country along with
awareness program among the rural population and migratory workers leads to the financial
inclusion in the Indian economy

Shivaji and Bhargavi (2017) did comparative study of products and services provided by the
PayTM and BHIM apps in the Tumkur city of Karnataka State. Data was collected through
primary sources through a simple structured questionnaire. The sample size of 250 customers by
considering parameters of gender, age, occupation, income, qualification, mobile
banking/commerce apps, Source of Apps were taken. The simple percentage method, bivariate
correlation and regression statistical tools were used to analysis and interpretation of data. The
study found that PayTM leads BHIM apps in terms of revenue, less transaction charges, easy to
transect, offers and cash back, on the other hand BHIM apps provides safety and security in
transaction. The study suggested that BHIM app should develop more features, so that users will
have to use only one app for all the uses.

Tharanikaran et al. (2017) assessed the impact of e-banking service quality provided by banks
on the customer satisfaction level in Batticaloa District of Sri Lanka. A sample size of 231
customers was taken. Sample t-test was performed to test the hypotheses related to service
quality and customer satisfaction. The study found that e-baking services provides quality
services to their customers with attractive offers and safety features, hence customers are
satisfied with the same. The findings of study were banks and business correspondence should
have to develop and implement service quality parameters for the customer satisfaction.

Sahu and Kumar (2016) analyzed the perception of people of the rural and unbanked areas with
urban and semi urban banked areas people of four villages of Ganjam district. A sample size of
200 respondents was taken by convenient sampling technique. The data was collected from both
primary and the secondary sources. The study found that rural area is aware of the internet, e-
banking, m-banking etc. even there are not facility of bank in their locality and having resources
and capacity to go for such transactions. The study suggested to re-launch an old postal system
and Regional Rural Banks to rural mass, so that they can interact personally and can rely without

68
any inhibition. Payment Banks should be operated in amalgamation or joint venture with post
offices and RRBs.

Aggarwal and Bhatnagar (2016) elaborated the cause of emergence of Payment Banks by
describing current payments eco-system through the conceptualized bank transaction statement.
The study focused on difference among the banked, young, technology savvy population and
rural, unbanked and traditional population by analyzing the factors that is customer
demographics, potential USP’s (Unique Selling Propositions) of the payment banks, challenges
faced by the payment Bank and new offerings with cash back guarantee. The study found that
payment banks in the current scenario challenges the traditional banks in terms of customer
engagement, channels for providing services, cost, capital, culture and collaborations as the
banks provides 24x7 services with low cost, high speed networks and security in transactions
hence the study suggested that and offers the payment banks should blend their business with the
traditional banks and gradually shift to the new systems to cater the resistance of change of the
stakeholders.

Damle et al. (2016) explained the genesis of Payment Banks and it’s stimulus on the financial
inclusion in India by explaining the model of Prepaid Payment Instruments (PPI), studied
history, procedures and role of Payment Banks in the financial inclusion. Further the study
reviewed a critical discussion on the inclusion of innovation in the development theories. The
study was exploratory in nature, and found PayTM, Reliance and Fino Paytech have large
number of popularities in terms of users and consumers. It was suggested that banks should
enhance their ATM network in rural and un-banked areas to serve poor villagers. Banks need to
initiate training programmes to their employee and frontline officer, staff and mangers.

Aggarwal (2016) reviewed the initiatives taken by Reserve Bank of India to revitalize the
banking sector and to promote financial inclusion in the country. Empirical research was
conducted to find out the transformations in the banking industry. The study was based on
secondary data. The study found that Payments banks are expected to introduce fresh ‘hi-tech
and hi-touch’ digital approach. The study suggested that Payment banks should interacting their
ever-growing customers by providing faster-easier-simpler banking facilities, which not only

69
driven creatively and passionately among bankers but also contribute to the growth of different
sections of the society and economy at large.

Abid (2016) studied the fundamentals of payment banks and challenges thereon for proving
payments/remittance services to migrant labour workforce, low-income households, small
businesses, other unorganized sector entities and other users. The secondary data such as
information from national and international journals, magazines, websites of Payment Banks,
and Reserve Bank of India was taken for study. The study is descriptive in nature. The study
found that payment banks bounded with banking operations and do not deal with loan facilities,
but this bank helps the migrant labour, low-income households’ small businesses, other
unorganized sector entities and other users for payments/remittance of quality products and
services at low costs as they can operate through mobile phones. The study suggested that
payment bank should provide high speed internet, safety and security in transaction and
facilitates to select any local and regional language for banking operations to their customers and
to spread awareness through print media, door-to-door campaigns and surveys and by opening
centers of the same.

Vyas and Singh (2016) studied the payment banks scenario in India with the success of M-Pesa
in Kenya. The secondary data that is reports of Government of India /survey and websites of
Safaricom (a telco wallet) in Kenya's were taken for study. As per study the Safaricom is the
largest mobile network operator in Kenya's, which supports their customers for transfer of
money with lower costs and provides convenient and reliable channel, further Safaricom
provides M-Pesa account, an innovative payment service for the unbanked populace. The study
found that Safaricom M-Pesa account provides ease to their customers to convert cash into "e-
money" through a Safaricom dealer, and with provides simple instructions on their phones to
make payments in a safe and convenient way. The study suggested that to drive customer
adoption, players will need to enable a wide range of use cases across.

Kalyani (2016) focused upon awareness of people on the paperless e-currency transaction and
its usage. The target customers of 200 sample size were taken, who actually using Internet
banking, mobile banking and further segregated the sample in terms of having account of
customers in Private and Nationalized banks for study. The parameters that is age group, gender,

70
educational qualification, occupation and income were taken for evaluation the awareness level
of people. Non probability sampling technique that is convenient sampling method was used.
The techniques i.e ANOVA’s, chi-square, correlation, ranking and t-test were used to test the
hypothesis. The study found that the respondents preferred private banks named ICICI, Axis and
HDCF followed by nationalized banks named SBI, SBBJ, PNB, BOB, as the customers choose
the modern banking because of ease of use and better encrypted reliability of secure and fast
transaction. Further the study suggested accepting and adapting modern financial system as it
provides ease of transaction, security and offers discount as compared to traditional banking
system.

Sardar (2016) did comparative study on awareness and preference of customers towards the
usages of Mobile wallets and government’s Unified Payments Interface (UPI) at Jalgaon city in
Maharashtra. A sample size of 100 respondents was collected through structured questionnaires.
The parameters age, gender, education, annual income and profession of the respondents were
taken. The primary data and secondary data were used. The statistical tools like percentages. t-
test and chi-square test were used. The study concluded that mobile wallets will have to expand
their revenue streams as compared to government’s Unified Payments Interface (UPI) as features
of UPI technology is still not utilized fully. The study suggested that UPI should support many
banks account at a time for making payment.

Tharanikaran and Sritharan (2016) did comparative study of four Payment bank authorities in
India and evaluated the awareness of Payment banks among customers. The survey was
conducted with the help of structured questionnaire. 200 respondents comprising of students,
employees and others were selected through convenient sampling technique. The data were
collected from the Primary and secondary resources. The simple percentage, graphical
representation, correlation analysis, post-hoc test and chi-square tests were used as statistical
tool. The study found that PayTM bank was the most preferred bank followed by other three
payment banks. As far the awareness of payment bank is concerned, it found majority of
customers prefer Payment Banks as the bank provides easy access and facilitates in the payment
of utility bills, whereas only 14 percentages have never used these channels due to security
issues. The study suggested that Payment Banks should works on providing security feature in
transitions; strengthen Know Your Customer (KYC) norms, spreading awareness regarding

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financial literacy and to organize/conduct free seminars across cities, especially in the under-
banked and unbanked areas.

Shivnani (2016) explored the customer perceptions about Airtel payment banks (APB) services
at Kibber, Mawlynnong, Bisnoi and Raghurapur (4 unbanked rural villages) in Himachal Pradesh
in India, A random sampling technique was used in taking the sample of 200 customer through
convenient sampling techniques. A structured questionnaire was prepared with a three-point
Likert scale. Secondary data was collected from different published sources. Survey method was
used in this study. The study found that most of users of unbanked rural villages are not fully
aware regarding the Airtel banks apps functions and benefits. Therefore, the study suggested that
Government should launched graphic information system (GIS) through its Business
correspondent (BC) and spread awareness about uses of the internet, e-banking, m-banking in the
rural area through their bank branches at Panchayat levels.

Krishnadas and Shafni (2015) studied the impact of Airtel money of Airtel Payment bank on
the satisfaction level of customers of Trivandrum district. The data of 500 respondents were
collected through the questionnaire using direct survey method to find out impact of customer
satisfaction on customer loyalty. Descriptive research design method was used for the study.
Regression analysis is used to test the impact of customer satisfaction on customer loyalty. The
Cronbach’s Alpha was found to check reliability. Correlation and regression analysis and chi-
square tests were employed as statistical tools. The study found that as the customer satisfaction
had a positive impact on customer loyalty, but the customers of Airtel easily shift to other similar
service providers due to non-awareness of its products and services. The study suggested that
Airtel should take steps to improve the satisfaction of the customers by helping the existing
customers to explore the products/ services.

Sanaz (2015) analyzed the developing consumer adoption model on Mobile wallets in Canada.
The sample size of 530 respondents was collected through convenience sampling method. The
primary data were collected thorough structural questionnaires. Partial least square model was
used to test the hypothesis. The study found that there the people are fully aware about the
Mobile wallets due to its features i.e convenience in handling, save time, faster mode of
transaction and provide security application in transaction, hence customer in Canada accepted

72
the developing consumer adoption model on Mobile wallets. Further the study suggested that the
model should get rewards or cash back in terms of discount to their customers.

Chandra and Kumar (2014) studied the profile of telecom retailers and assessed and examined
the retailer’s awareness and market potential for Airtel Money in rural parts of Chittoor District
in Andhra Pradesh. The descriptive quantitative Research method was used. The primary data
was collected from the retailers through a well-designed structured questionnaire. Secondary data
was collected from different books, magazines, websites and newspapers. The sample unit of 70
Telecom retailers was used. Simple mathematical tools and percentage was used. The parameters
i.e age, gender, proprietorship, products of the Airtel Payment Banks were used in this study.
The study found that through Digital mode most of the customer get use of telecom services as it
save from bad connections, feeble networks and stop worrying about money, which made it a
challenging task to the traditional retailers to sell telecom services. As the study was restricted to
rural areas only, it is suggested to spread awareness of usages of Airtel Money in the unbanked
areas also through social media.

Sanghita and Sinha (2014) evaluated the factors affecting the electronic payment services in
India on the customers of metro city Kolkata, West Bengal and its surrounding suburb area. The
sample size of 235 respondent (comprising of banking, government services, IT professionals,
students, retired persons and housewives), based on survey-based questionnaires were collected.
The simple percentage, correlation and regression analysis methods were used. The study found
that users of electronic payment services are mostly highly educated people. The study suggested
that as electronic payment services have tremendous growth in the last few years since 2016, still
there is a need to strengthen the four factors scope of E-Payment, its legal framework,
customer’s convenience, incentive and innovation.

Prasad and Kumar (2014) studied retailer awareness about Airtel Money and market potential
for Airtel Money among the telecom customers in rural parts of Chittoor District in Andhra
Pradesh. A sample size of 150 retailers was selected through judgmental sampling. Primary data
was collected through structed questionnaire. Seven-point Likert scale, Proximity Squares
Scaling (PROXSCAL) and multi-dimensional scaling is used for analyzing the awareness level
of retailer about Airtel Money. The study found that only 25 percent retailers knew about the

73
services provided by the Airtel Money. The study suggested that regulatory framework needs to
evolve to spread awareness about the digital system and widening and improvement in quality of
banking services at reduced costs and which may finally result in financial inclusion.

Nautiyal (2014) studied that impact of service quality on customer satisfaction. A survey of 225
respondents was conducted across Delhi using a 22-item instrument based on the SERVQUAL
model of 5 dimensions – Tangibility, Reliability, Assurance, Responsiveness and Empathy.
Regression analysis was conducted to measure whether these dimensions impact customer
satisfaction. All the five dimensions considered in this study exhibited a positive correlation with
customer satisfaction, indicating an expected change in the same direction. The study found that
India’s banking sector is set to emerge as the fifth largest worldwide by 2020 and the third
largest by 2025. The study suggested that as banks have to improve on these particular
dimensions of their service offering in order to improve customer satisfaction which in turn is
essential for both retaining existing customers as well as for attracting new ones.

Prasad (2013) studied customer perceptions of the delivery of service quality and their customer
retention abilities of CBD (Commercial Business District) in Bangalore. A simple structured
questionnaire was distributed to 500 customers. The study was based on quantitative research.
Multiple regression analysis has been used to analyze the relationship between service quality
and customer satisfaction. The study found that a better understanding of the service quality
attributes is needed by the bank employees to enhance their customer retention abilities, The
study suggested that bank employees need to be more competent in performing their job and
more open and expressive about their thoughts and feelings which have a major impact on
establishing relationships which is an antecedent to customer retention.

Lau et al. (2013) studied the interrelationships between service quality, customer satisfaction
and customer loyalty in the retail banking sector in Hong Kong country. A sample of 119 retail
banking customers was taken from the Shanghai Banking Corporation (HSBC) in Hong Kong.
The questionnaire based on a SERVQUAL model was developed to identify five dimensions (i.e
tangibility, responsibility, reliability, assurance and empathy) in banking service environment on
customer satisfaction. The study found that the five SERVQUAL dimensions have a positive
influence on customer satisfaction, while empathy was the least significant. The study suggested

74
banking industry practitioners associated retail banking services should expand their resources
towards the service quality which ultimately move towards the customer’s satisfactions and
retention.

Anand and Selvaraj (2012) examined the impact of service quality on customer satisfaction and
Loyalty in Indian Banking sector by applying SERVPERF scale. A total of 50 customers of State
bank of India, Mohan Nagar Township branch of Salem District in Tamil Nadu were
interviewed. Exploratory factor analysis, correlation, multiple regression was applied. The study
found customers are satisfied towards the services and its product quality provided by the bank
in the Salem District. Further the study suggested that Bank should establish its branches in the
rural area and unbanked area in the Tamil Nadu for connecting maximum customers to meet
their satisfaction level and loyalty

CHAPTER 4

DATA ANALYSIS, INTERPETATION AND PRESENTATION

A descriptive research design has been used to convey a survey of 114 samples. Simple Random
Sampling technique has been used for the same. Samples were collected from various categories
of people. Data of questions asked in the research instrument to the respondents and its
interpretations are as follows:

Question 1:

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OBSERVATION:
I tried to bring in diversity in my sampling by sending across the questionnaire to a diverse age
group. However, as you can see most of the audience comes under the age of 18-30 age group
with 64.9% precisely followed by 14.9% of population falling under 31-45 age group. I have
interaction with mostly people falling in that range. The research cannot be completely accurate
due to restricted geographical barriers. The study took place in Mumbai itself which makes it
convenience sampling. Although it does not give us 100% accurate results, it does give an idea
of the overall objectives by taking in the opinion of all the different age groups.
QUESTION 2 :

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OBSERVATIONS:

GENDER NUMBER OF RESPONSES

MALE 44.7%
FEMALE 55.3%

QUESTION 3:

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OBSERVATIONS:

Occupations is an important factor in investment decision making process.

The highest percentage that is 58.8 % were students in this survey.
And the next highest percentage is of people who are working

QUESTION 4:

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OBSERVATIONS:

According to the survey 86.8% of respondents has selected “YES” which states that they
know about Payments Bank.
About 6.2% respondents don’t know about Payments bank
Remaining 7% respondents are not sure about the Payments Bank. As per the survey, it has
been observed as majority of the people are moving and keen towards using the Payment
Bank services.

QUESTION 5:

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OBSERVATIONS:

From the above pie chart, we can see that 74.6% of the respondents has used payment bank
and are availing the services provided by them.
And about 21.9% of the respondents has never used any Payment Banks before. Remaining
3.5% of the respondents are not aware about the payments bank.
Now a day’s people are still not using these type of services thinking that it is not safe and
secure and are afraid of any frauds.

QUESTION 6

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OBSERVATION:

According to the survey, 57% of the respondents are using Payment Banks for “Easy and
Limited access”.
21.1% of the respondents are using the services for “Small Savings”.
About 14.9% of the respondents are using the services because there is no “Credit card risk”.
Remaining 7% of the respondents are not using this service as they are not aware about
Payment Bank.

QUESTION 7

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OBSERVATIONS:

According to the survey, 71.1% of the respondents are not having any difficulties while using
the services.
24.6% of the respondents sometimes face issue while using this service.
Remaining 4.3% of the respondents face difficulties while using Payment Bank services.

QUESTION 8

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OBSERVATIONS:

According to the survey, 52.6% of the respondents are using Payment Banks services very rarely
and this shows that they are not using on daily basis.
31.6% of the respondents are availing the services regularly.
About 15.8% of the respondents are not using the services of Payment banks.

QUESTION 9

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OBSERVATION:

According to the survey, 63.2% of the respondents are facing Connectivity issue.
30.7% of the respondents are facing the difficulty of Risk of Fraud.
Remaining 6.1% of the respondents are not using this services hence are not facing any
difficulties.
Due to rising Cyber Crimes and other frauds people are still hesitant to use these kinds of
services.

QUESTION 10

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OBSERVATION:

According to the survey, 39.5% of the respondents have selected the “All of the above”
option which states that they find that the Payment bank services is safe and secure, which
also provides higher rate of interest and do not have to maintain balance in the account.

29.8% of the respondents has only selected “Safe and secure” option. 21.1% of the
respondents have opted “Zero Balance account” as there is no minimum balance maintaining
criteria.
And the remaining 9.6% of the respondents has selected “Higher Interest Rate” option.

QUESTION 11

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OBSERVATION:

According to the survey, 43% of the respondents has selected “Agree” option. 43% of the
respondents has selected “Neutral” option.
And 9.6% has selected “Strongly agree” option. Remaining 4.4% of the respondent disagree
with the above statement.
As per the graph, it is understood that maximum people are using this services because this
system is very is to use.

QUESTION 12:

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OBSERVATION:

According to the survey, majority of the people use “PayTm Payment Bank” that is almost
57.9%.
About 8.8% of the people use “Jio Payment Bank”.11.4% of the respondents has selected
different options.
This shows that PayTm and Jio are the most used Payment Banks.

QUESTION 13:

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OBSERVATION:

The question trails if the respondents prefer small banks over payment banks.
Here we can observe that 15.8% of the people agree that they prefer small banks over payment
banks.
43.9% of the people disagree with the above statement while 40.4% of the people are not sure if
they prefer small banks over payment banks.

QUESTION 14:

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OBSERVATION:

The above pie chart indicates if the respondents would recommend payment banks to other.
It shows 68.4% of the respondents would recommend others for using payment banks.
While 25.4% of the respondents are not sure with if whether they would recommend others about
payment banks.

CHAPTER 5
CONCLUSIONS AND SUGGESTIONS

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5.1 Conclusion

Payment banks are becoming the most popular medium of digital transactions. India is moving
towards a cashless and digital economy, which is more feasible and adaptable in relation to the
recent technological and economic trends. Payment banks are useful in this digital age, where
focus is on cashless payments and use of digital money. It is a step taken by RBI to redefine
banking in India and government will meet its goal of financial inclusion.

It viewed as a wise strategy towards financial inclusion, The primary objective of setting up
payments banks was to “further financial inclusion by providing small savings accounts and
payments/remittance services to migrant labour workforce, low-income households, small
businesses, other unorganized sector entities and other users, by enabling high volume-low value
transactions in deposits and payments/remittance services in a secured technology-driven
environment.” Payment banks, which were supposed to be the next big thing, sadly have not
lived up to the hype so far. The jury is still out on whether the PBs will ever succeed in the
country, but one thing is clear: it won’t be easy for them to survive.

The process of ensuring access to appropriate financial products and services needed by
vulnerable groups such as weaker sections and low-income groups at an affordable cost in a fair
and transparent manner by mainstream institutional players.

However, the competition between traditional and payment banks will lead to widening and
improvement in quality of banking services are reduced costs and which may finally leads results
in financial inclusion. On comparison, it's too early to judge the competency of Payment banks
with respect to, well established banks.

There are numerous bottlenecks that need to be addressed before the real benefits of payment
banks. There are millions of Indians don't have access to banking facilities. They cannot avail of
government benefits, loans, insurance and even interest on savings. Payment banks, IPPB, will
reach the unbanked and the under banked across the all cross section of society and geographies.
Innovation and improvisation of the business could be the key elements of success of Payment

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banks. This study concluded that today’s youth, who are well acquainted with mobile wallet and
have computer literacy are much aware about the services of Payments banks and make digital
transactions through wallet.

Secondly, male and married respondents, whose income are more than Rs. 10000/- prefer
Payment Banks services followed by the professionals, who have mobile network operator
agents, small merchants and kirana stores, agri-traders & small service providers having savings
A/c, current A/c, loan disbursements through tie-ups with Banks and NBFC and distribution of
insurance & investment products are using cash-in and cash-out, bill payments, money transfers
services through agents of payment banks. It has been concluded that in this research, a
significant relationship has been found between customer’s satisfaction and service quality of
payments banks to their customers.

The advent of payments banks in the Indian banking sector has been a striking step. The issue of
financial inclusion in a country with a low overall literacy rate could only be solved with
something so radical. Financial inclusion and literacy are crucial steps towards the formation and
development of a digital ecosystem. In addition, these banks have helped the government
immensely in implementing government welfare schemes, transfer schemes and subsidies in
various sectors.

These schemes and subsidies are now directly paid to the beneficiaries’ account rather than a
physical payment. Thus, creating competitiveness between the payments and commercial banks,
beneficial for the banking sector. Moreover, such competition will expand the quality of banking
services and reduced service costs.

Currently, the payments banks can be called game-changers of the banking sector due to their
user-friendly app-based platform and attractive services. Plus, they are a gateway for low income
and middle-income groups to access banking services in a more accessible form.

5.2 Suggestion

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No doubt, Payment Banks are doing a great effort to satisfy their customers by adopting
technology-based banking system but still banks are unable to make payments banks system as
number of their customers are used to visit branches instead the use of Payments banks because
they do not have knowledge about Payment Banks services and its uses.

Although it’s too early to judge the competency of payments banks, the effects till now are
positive. They are becoming popular amongst the youth as a model of digital transaction, bill
payment and recharging.
It is arguably one of the best strategies implemented for financial inclusion, which is showing
benefits. This has been a milestone achievement in bridging the gap between commercial banks
and rural regions.

Here are some suggestions that could make payments banks a more accessible, sustainable and
efficient aspect of the banking sector.

 The government should collaborate with these banks to organize awareness campaigns in
areas/regions with less financial literacy. This will make people more aware of the
benefits of the financial services offered by the regulated banking sector.
 Something like payments banks needs steady and cheap internet access. So the
government should make provisions for internet access to the people in rural areas.
 The government could draft separate legislation to streamline the governance of
payments banks in India.
 However, the legislation should be technologically unbiased and centred on payment
activities.
 The legislation should be clear and adaptive to the recent emerging services and products.
 The legislation should also offer a risk-based framework for incorporation in the
payments banks so that activities can be differentiated based on their risk.
 The existing PSS Act should be amended to accommodate and regulate all the services
currently offered by the payments.

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Proper awareness should be created among the masses at large that Payments Banks would save
their time, as they can make digital transactions through their mobile wallet, anytime anywhere.

 Payment Banks should use effective and appropriate technology to reduce the security issues
and make people assure that bank will be liable in case of any security lapse. By doing this,
customer feel secure and would take steps towards the usage of Payments banks services.
 To open more branches in unbanked and under banked areas in Punjab and spread awareness
about their products and services through their agents.
 Payment Banks should also focus on customers having age more than 40 years to use Payments
Bank services, such as domestic money remittance, cash-in and cash-out, bill payments.
 Banks should provide training to their employees to solve any type of grievances of their
customers on prompt basis.
 Payment Banks should hire technical staff also to eradicate the technical defaults to meet the
objectives of anytime, anywhere and anyhow and to provide 24x7 days a week services to their
customers.
 Government should invest money to help the payment banks, like, providing training to bank
staff members and organize seminars to make people aware about Payment Banks. Door to door
awareness program should be started to make aware more masses.
 Government should also impose strict rules and regulations to reduce hacking and insecurity
problems and penalty should be charged, if someone found guilty.
 A comprehensive policy should be framed to limit the liability of customers, which will help to
reduce unauthorized frauds.
 Eyeing the huge reservoir of consumer data by launching apps or point of sale (POS) systems
or digitalizing their operations and processes. These merchants provide a huge potential for
payment banks and fintechs to grow.

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 CHAPTER 6

BIBLIOGRAPHY

https://shodhganga.inflibnet.ac.in/

https://www.researchgate.net/

https://scholar.google.com/

https://shodhgangotri.inflibnet.ac.in/

http://shodhganga.inflibnet.ac.in:8080/jspui/bitstream/10603/365632/8/chapter
%202.pdf

https://www.moneymanch.com/list-of-payments-banks-in-india/

https://www.feedough.com/payments-bank/

https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2900

https://blog.ipleaders.in/what-is-payment-bank/

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 CHAPTER 7

APPENDIX

Q1) Age
o Below 18
o 18-39
o 31-45
o Above 45

Q2) Gender
o Male
o Female
o Others:____________

Q3) Occupation
o Student
o Self-Employed
o Service
o Others:____________

Q4) Do you know about Payment Banks?

o Yes
o No
o Maybe

Q5) Have you ever used a Payment Bank?

o Yes
o No

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 o Maybe

Q6) What is your main objective for using Payment bank?

o For easy and limited access
o Small savings
o No credit card issue
o Others:____________

Q7) Is it difficult to use?

o Yes
o No
o Sometimes

Q8) How often do you use Payments Bank?

o Frequently
o Sometimes
o Never

Q9) What are the difficulties you face while using Payment Banks?
o Connectivity issues
o Risk of frauds
o Others:_____________

Q10) According to you what are the advantages of Payment Banks?

o Zero Balance Account
o Higher Interest rate

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 o Safe and Secure
o All of the above

Q11) Payments banks system can be easily understood and readily adopted.
o Strongly disagree
o Disagree
o Neutral
o Agree
o Strongly Agree

Q12) Which of these Payment Banks do you use?

o Airtel Payment Bank
o India Post Payment Bank
o Fino
o Paytm Payment Bank
o NSDL Payment Bank
o Jio Payment Bank
o None of the above

Q13) According to you which is the best Payment Bank?

Q14) Do you prefer Small Banks over Payment Banks?

o Yes
o No
o Maybe

Q15) Would you recommend others for using Payment Banks?

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o Yes
o No
o Maybe

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