Payments banks have become important players in India’s banking industry, changing the way both individuals and companies carry out financial transactions. They belong to the category of financial institutions that were introduced in India in 2014. It offers those who are currently underbanked or unbanked access to basic banking services.
However, the Indian government’s decision to ban Paytm Payments Bank due to noncompliance with Know Your Customer (KYC) regulations has left many users wondering what alternatives they can use. Paytm Payment Bank was one of the most popular digital payment platforms in the country, and its sudden ban has caused significant inconvenience for its users. However, there are several other options available that will allow you to make digital payments with ease. To know, keep on reading.
Why RBI Banned Paytm Payments Bank?
Recently, the Reserve Bank of India (RBI) banned Paytm Payments Bank. According to the statement, Paytm Payments Bank will not be able to process credit transactions or take new deposits after February 29, 2024. As a result, a lot of users are looking for other platforms to fulfill their banking requirements.
The sudden change in events has caused some people who primarily rely on Paytm for their financial transactions to become curious and concerned. The reason for this action was that thousands of non-KYC (Know Your Customer) accounts held by Paytm Payments Bank Ltd (PPBL) were opened with a single PAN in thousands of instances.
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The whole thing began in March 2022 when the RBI ordered extensive audits of Paytm Bank’s IT systems and prohibited the bank from accepting new clients. To put it briefly, the RBI was not happy with Paytm Bank’s actions, and this crackdown stems from unresolved regulatory and compliance issues that date back to March 2022.
Advantages of Paytm Payments Bank
- Your entire banking system is available with a single-finger touch.
- zero minimum balance is not an issue, which means the Paytm payments bank will not fine you if your account has no balance.
- Zero transaction fees for mobile banking and net banking (neft/imps), whether from Paytm to Paytm or from Paytm to other banks.
- You can continue to use your Paytm wallet, which has only changed its name from One97 Communications Ltd to Paytm Payments Bank.
- KYC can be completed at your door in metro cities for free.
- Added UPI instant hassle-free payment option.
Disadvantages of Paytm Payments Bank
- Banks cannot lend money from their deposits, and thus cannot charge high interest rates on borrowed funds.
- Payment banks do not provide credit as a product, putting them at a significant disadvantage compared to commercial banks.
- Unexpected competition, such as the Unified Payments Interface (UPI), is putting a strain on payment banks.
- There is no understanding among the general public regarding how to obtain the services.
Best Alternatives of Paytm Payments Bank
With the recent ban on Paytm Payments Bank by the Reserve Bank of India (RBI), users must explore alternative payment options. Check out the following list.
Airtel Payments Bank
Bharti Airtel, India’s largest telecom provider, launched the Airtel Payment Bank in January 2017 to help the government of India achieve its promised cashless revolution. It is a digital bank that provides a variety of services to its customers, including savings accounts, money transfers, bill payments, recharges, and more. Compared to most other banks in India, Airtel Payments Bank offers a higher interest rate of 2.5% annually on the balance in the savings account. Customers can open an account without any paperwork or minimum balance requirements by using their Aadhaar card and biometric verification. It offers a virtual debit card that can be used at more than a million Indian retailers and for online purchases.
Indian Post Payment Bank
Indian Post Payment Bank (IIPB) is backed by India’s post offices and has a vast network of over 1.55 lakh post offices, 3.01 lakh postmen, and Gramin Dak Sevaks (GDS) who provide doorstep banking services to customers all over the country. Customers can access their accounts using their Aadhaar number and biometric authentication by utilizing the Aadhaar-enabled Payment System (AePS). It offers its clients third-party goods and services like insurance, mutual funds, pensions, and more through partnerships with other financial institutions and service providers.
Must Read: 3 Ways to Find Your UPI ID on Google Pay
Fino Payment Bank
Originally called Fino Payments Bank Limited, Fino Payment Bank Limited was established on April 4, 2017. This modern bank provides customers with a variety of banking services, including current and savings accounts, fixed deposits, insurance, and loans. It offers competitive and enticing interest rates that vary based on the type and duration of the deposit, from 2.75% to 6.25% annually. The Fino BPay app or website offers consumers a digital platform to access their accounts, transfer money, pay bills, recharge mobile devices, and take advantage of other services.
Jio Payments Bank
Since its founding in November 2016, Jio Payments Bank—a joint venture between Reliance Industries Limited and the State Bank of India—has emerged as a major player in the Indian banking industry. The bank uses the vast network of Reliance Industries and the banking know-how of the State Bank of India to operate to offer easily accessible and cutting-edge financial services. There are no monthly fees or minimum balance requirements to open and keep a savings account. With the JioMoney app or UPI, you can send money to any Indian bank account for free and without limits.
NSDL Payments Bank
In November 2016, NSDL Payments Bank—a National Securities Depository Limited subsidiary—was established, signifying the company’s entry into the banking industry. The bank has a wide reach throughout India, operating through more than 100 branches and 3,000 access points. It provides a variety of financial services, such as current accounts, savings accounts, and mobile banking options.
NSDL Payments Bank is noteworthy for having developed a strong network of more than one lakh merchants who use the bank to process payments and transactions. Interest rates on savings and fixed deposits are competitive and range from 3.5% to 6.5% annually. Extra features like online shopping, bill payments, mobile recharge, instant money transfers, and free ATM transactions.
Conclusion
In conclusion, there is no doubt that the RBI’s ban on Paytm Payments Bank has changed the Indian market for digital payments. As an informed consumer, you must, nevertheless, adjust and look into alternatives that can satisfactorily meet your financial requirements. Take some time analyzing your needs and determining which core features are most important to you. This will assist you to limit the number of options that closely match your requirements.
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