Jio Payments Bank, a joint venture between Reliance Jio and State Bank of India with a 70:30 ratio launched today on April 3rd, 2018. RBI released a statement on Tuesday stating the release “Jio Payments Bank Limited has commenced operations as a payments bank with effect from April 3, 2018.”
Jio Payments Bank was one of the 11 payments banks approved by the RBI in 2015. Reliance Jio now joins other payments banks operated by PayTM, Airtel, Idea, Fino, etc.
Jio Payments bank – Competitors
On August 19, 2015, a total of 11 payment banks were approved by RBI one of which was Reliance Jio. Its other competitors are below:
- Tech Mahindra
- Idea Cellular (Aditya Birla)
- India Post
- Fino Payments
- Sun Pharmaceuticals
- National Securities Depository
Benefits – Jio Payments Bank:
Some of the benefits expected out of the Jio Payments Bank are below:
- Zero balance Account: Like its other predecessors, it is expected that Jio Payments Bank will offer a zero balance account with no requirement of maintaining a monthly balance.
- Excellent Coverage: With a partnership of SBI and Jio, it is expected that the coverage of the Payments Bank will be very high
- High Interest Rate on Savings Account: While Airtel offers a 5.5% interest on the account balance, PayTM offers 4% interest rate. Given Jio’s aggressive pricing and marketing strategy, it is widely expected that Jio will launch with aggressive interest rates for Jio Payments Bank.
What is a payments bank?
A payment bank is a a new type of digital banking initiative conceptualized by India’s RBI – Reserve Bank of India. A payment bank can operate a completely digital bank with a deposit of up to 1 lakh INR per customer. It is to be noted that payments banks cannot operate ANY form of credit or lending services. However, they can issues ATM debit cards and online/mobile banking features through their service. The initiative is targeting the Digital India program to bring millions of Indians into organized banking through technology.
Benefits of payments bank:
Zero Balance Accounts
Most banks currently do not offer zero balance savings/current accounts. Payments Banks with their lean operations are able to offer zero balance accounts which you can operate with zero fees even when you run a 0 INR balance.
Better Interest Rates
PayTM offers interest rates of 4% for its payments bank while Airtel and India Post offer 5%. These are higher rates compared to what traditional banks currently offer today.
Linking of Governement Schemes
Recently, India’s FM, Arun Jaitley announced that the payments banks will be offer pension schemes such as the Atal Pension Yojana to the payment bank subscribers.
Most importantly, payments banks can be used by people who have a lot of payments to make online for utilities and bills. By availing a better interest rate and a zero balance account, they can take advantage of a better interest rate.