Are payments banks for you?
You must compare interest rates, charges levied on deposits, withdrawals and transfers, before parking your money in a payments bank, say experts
MUMBAI:THIS month, India Post Payments Bank Ltd started providing banking services in the country. Others payments bank include Airtel Payments Bank Ltd, Paytm Payments Bank Ltd, Fino Payments Bank Ltd, Aditya Birla Payments Bank Ltd and Jio Payments Bank Ltd. Let us take a look at how the products of these banks compare:
WHAT IS A PAYMENTS BANK?
Payments banks are banks that can only take deposit from you in the savings account. However, this comes with its own restrictions. You can deposit money only up to ₹1lakh in the savings account, and can neither open a fixed deposit nor can borrow money. However, they can offer loans through a third party. The loan will be on the books of the lender but distributed by the payments bank.
Payments bank and small finance banks came into existence in 2015, when the Reserve Bank of India (RBI) decided to open a window for differentiated banking licences in 2014. The first payments bank, Airtel Payments Bank was launched in January 2017.
INTEREST RATE
To begin with, all currently operational payments banks offer 4% interest on savings deposit. But this was not always the case.when the government did a pilot launch in 2017, India Post Payments Bank was offering an interest on savings account in the range of 4.5%-5.5%, depending on the amount. This was then reduced to 4%. Similarly when Airtel Payments Bank was launched in 2017, it offered 7.25% interest on its savings deposit. The bank later slashed the interest rate. However, Paytm Payments Bank and Fino Payments Bank kept the interest rate at 4% in line with some of the large commercial banks. Jio Payments Bank website provides no information about any products, charges or services.
CASH WITHDRAWAL AND DEPOSIT CHARGES
Payments banks have a cap on the number of permitted cash deposits and withdrawals, and levy charges on it. India Post Payments Bank offers three savings account products —basic savings account, regular savings account and digital savings account. In a basic savings account, you can withdraw cash only four times a month. The bank also provides doorstep banking. However, you have to pay ₹25 per withdrawal or deposit and ₹15 per non-cash transactions.
Airtel Payments Bank charges 0.65% on cash withdrawals of an amount above ₹25,000. In case of fund transfer, you have to shell out 1% of the amount if you send money from Airtel Payments Bank to another bank through internet banking, mobile app or USSD. In case of domestic remittance, you have to pay ₹5-₹125 per transaction, depending on the amount.
In case of ATM withdrawal for Paytm Payments Bank, three free cash withdrawals are offered in metro cities and six in non-metro cities. After this, you have to pay ₹20 per cash withdrawal and ₹8 for mini statement, balance enquiry and PIN change. If you send money from your Paytm Wallet to Paytm Payments Bank, you will be charged 4% the amount.
In case of Fino Payments Bank, there are no charges for cash deposits up to ₹25,000 per month. However, for transaction amounts above ₹25,000, you will have to pay 0.5% of the amount or ₹5, whichever is higher. From the third transaction onwards, you also have to pay for cash withdrawals done at merchant outlets.
Aditya Birla Payments Bank charges ₹8.5-₹85 for withdrawals of amounts up to ₹10,000 and 0.85% of the amount for an amount from ₹10,000 to ₹25,000. For cash deposits, you will be charged 0.3% the amount after five transactions a month.
ELECTRONIC FUND TRANSFER
To transfer funds through national electronic funds transfer (NEFT), real-time gross settlement (RTGS) and immediate payment service (IMPS), India Post Payments Bank charges ₹2.5 to ₹50, depending on the mode of money transfer and the amount. Aditya Birla Payments Bank, charges ₹5-₹10 for electronic fund transfers within the bank. In case of NEFT and IMPS, it charges ₹2.50 to ₹25, depending on the amount. Fino Payments Bank charges ₹2.5 to ₹25 for fund transfer through IMPS and NEFT, depending on
the amount and type of transaction.
CARD CHARGES
Not all banks offer a physical debit card, but those that do charge a fee. Aditya Birla Payments Bank charges ₹75 as issuance fee and for card replacement. Fino Payments Bank charges an issuance fee ranging from ₹175-₹225 and an annual fee in the same range from the second year onwards. It offers three free card transactions in metro cities and five in non-metro cities per month. After this, it charges ₹20 per transaction.
The RBI has prohibited Paytm Payments Bank, launched in May 2017, from opening new accounts and wallets with effect from 20 June 2018, on account of violation of certain licensing conditions and operating guidelines. Paytm Payments Bank offers a physical Rupay debit card with an issuance charge of with an issuance charge of ₹125 and an annual subscription charge of ₹100.
OTHER CHARGES
In case of Fino, you need a monthly average balance of ₹1,000 in one of the saving accounts they offer. You will be charged ₹50 in case of nonmaintenance of the balance. India Post Payments Bank’s QR card reissuance will cost you ₹25 to ₹50 for balance certificate and ₹50 for card or kit returned due to wrong address or cheque bounce.
SHOULD YOU OPT FOR IT?
Anyone above the age of 10 can open a basic savings account with a payments bank. To open a digital account, you need to be at least 18 years old and you have to convert it into a regular account within a year. It works for those who don’t have access to universal banks. Since banks are yet to come out with its third-party products, we will have to wait and watch.
WHAT IS IT?
Balance transfer on home loans is a facility which allows you to transfer your outstanding loan from one bank or housing finance company to another. It works well in cases where a lower interest rate is available with other banks when your bank is offering a higher rate. To
transfer your loan, you have to pay certain charges.
SHOULD YOU OPT FOR IT?
You should opt for it only if the overall cost of your loan comes down. Other than interest rate, you have to calculate your overall outstanding loan amount and other charges. If you are able to save money and the net benefit is substantial, you should opt
for it.
ANYONE ABOVE 10 YRS OF AGE CAN OPEN A SAVINGS ACCOUNT WITH A PAYMENTS BANK. IT WORKS FOR THOSE WHO DON’T HAVE ACCESS TO UNIVERSAL BANKS