ABSTRACT

Payment banks are a new model of banks that can accept deposits up to Rs. 2,00,000
per customer but cannot issue loans or credit cards. They can offer savings and current
accounts, debit cards, online or mobile banking, and remittance services. They are
primarily targeted at increasing financial inclusion and helping the underbanked and
unbanked populations. These banking institutions can only accept deposits and make
remittances. Payment banks are distinct from international banks, and they function
on a smaller scale. They must have a minimal paid-up wealth of Rs. 1,00,00,000.
There are now six payment banks in India, according to the RBI: India Post Payments
Bank, Paytm Payments Bank, Airtel Payments Bank, Fino Payments Bank, Jio
Payments Bank, and NSDL Payments Bank. These banks have distinct business
strategies and customer bases, but they all face the same obstacles, such as poor
awareness, a lack of incentive programs for representatives, infrastructure and
technological concerns, and regulatory limits.

INTRODUCTION

Payments Bank was established in response to the Nachiket Mor Committee’s

suggestions to function on a smaller scale with the slightest credit risk. The primary
goal is to promote financial inclusion by providing financial and banking services to
unbanked and underbanked communities, as well as assisting migratory workers, low-
income households, small enterprises, and others. It will enable residents who have
previously exclusively traded with cash to transition to formal banking. Conventional
banks may be unwilling to build branches in every community because of the low
returns, but simple cell phone coverage is now all that is necessary. The promoter’s
contribution to the Payment Bank’s paid-up equity capital must be at least 40 percent
during the initial five years from the start of its operations. On current accounts,
payment banks will be able to make specific payments and receive cross-border
remittances. They are incorporated under the Companies Act of 2013 but are subject
to a slew of laws, including the Banking Regulation Act of 1949, the RBI Act of 1934,
the Payment and Settlement Systems Act of 2007, the Foreign Exchange Management
Act of 1999, and others.
METHODOLOGY

Payments banks are a relatively new idea in India, and the study aims to determine the
reach of payment banks throughout the country. The feasibility and ultimate potential
of a venture rely largely on the viewpoint of the intended audience and the existing
competitors.

The primary data is collected from various government websites and the secondary
data is collected from various published articles, journals, newspapers, and books.

ANALYSIS AND FINDINGS

75.5 percent of Indians are aware that in India Payment Banks have been approved.
Many, however, are unaware of payment institutions working standards and basic
norms and regulations. A lack of knowledge among Indian residents about the
introduction of payment banks will utterly contradict the objective of these payment
institutions. Airtel and Paytm payment banks remained operating at the time of the
study. Just 7.5 percent of consumers are concerned about the safety of their payment
bank accounts, which is an encouraging indicator. Research also suggests that just 7.5
percent of Indians believe that payment banks are not at par with commercial banks.
As a result, consumers believe payment institutions are quite safe in terms of
operations, with a low chance of theft and anomalies. 94.3 percent of consumers have
no objections to the interest rates given by payment banks. Furthermore, because
these banking institutions have such a 75 percent SLR ratio, they are quite stable. As a
result, payment banks may be a highly popular and dependable investment vehicle for
consumers looking to invest less than Rs. 1,00,000. If 94.4 percent of the individuals
in India are willing to utilize payment banks, the country will be a huge achievement
in the years to come. The RBI’s whole payment bank concept centers around quick
cash flow and minimal risks, which is often a big worry for bank customers and might
be one of the factors for their desire to create an account with payment banks.
According to the poll, the two most significant benefits of payment banks are beyond
the Indian commercial banks that operate for clients. These are:

i. Simple money transfer to rural places

ii. Accommodation
As a result, it is evident that the services given by payment banks will help them
achieve popularity among the general public.

Furthermore, if payment banks focused solely on offering and expanding on these two
benefits, they could serve 77.3 percent of the general population.

People are aware that the RBI has launched payment banks in our nation, but the
operating guidelines, perks, and convenience of access have yet to be pushed in the
mainstream press. For this study to be effective and fulfill the goals of financial
intermediation in rural India, either the government or private parties must offer
promotion and support centers or help desks (payment bank owners). People in our
nation are confident in the safety and security of transactions made through payment
banks since payment applications are extensively utilized. It is also less risky than
equities and mutual funds.