5 Payments Banks facilitating tech-driven financial inclusion in India

By Gloria Mathias

A payments bank is a specialized type of bank in India designed to operate on a smaller scale compared to traditional banks. It focuses on providing basic financial services such as deposits and payments. These banks cannot issue loans or credit cards, making them distinct from conventional banks. The concept of payment banks was introduced by the Reserve Bank of India (RBI) in 2014 to enhance financial inclusion, particularly targeting unbanked and underbanked populations. The RBI’s guidelines for these banks were aimed at leveraging technology and innovation to extend banking services to rural and remote areas.

Payments banks play a crucial role in promoting financial inclusion by offering small savings accounts, payment and remittance services to migrant labourers, low-income households, and small businesses. They rely heavily on technology, using mobile banking and digital platforms to keep operational costs low and efficiently reach remote regions. With a set capital requirement ensuring their stability, these banks can accept deposits (up to a certain limit) and issue ATM and debit cards. Still, they are restricted from lending and issuing credit cards. Payments banks complement traditional banks by focusing on specific segments and services, thereby enhancing the overall financial inclusion landscape in India.

Listed below are 5 Payments Banks redefining access to banking technology in India:

• Airtel Payments Bank

Airtel Payments Bank, India’s first Payments Bank, launched in January 2017, is committed to empowering the nation with accessible and inclusive banking. It offers a diverse range of safe, simple, and rewarding banking services through a network of over 5 lakh+ Banking Points. With leveraging technology, it continually innovates and recently introduced a Smartwatch for seamless and contactless payments. It provides comprehensive salary management solutions for small businesses and last-mile collection management services alongside white-labelled open banking APIs for large industries & institutions.

• Fino Payments Bank

Fino Payments Bank is a prominent payments bank in India, established with the primary goal of promoting financial inclusion. Launched in 2017, it received its license from the Reserve Bank of India (RBI) in 2015 and evolved from Fino PayTech, a company specializing in financial technology solutions. Fino Payments Bank aims to cater to the banking needs of the underserved and unbanked populations, providing essential services such as savings accounts, remittances, and payment solutions. By leveraging technology and an extensive network of banking points, it ensures accessibility and convenience for its customers, especially in rural and remote areas.

• India Post Payments Bank

India Post Payments Bank (IPPB) has been set up under the Department of Post, Ministry of Communication with 100% equity owned by the Government of India. The fundamental mandate of IPPB is to become the most accessible, affordable and trusted bank for the common man in India, removing barriers for the unbanked and reducing opportunity costs to the underbanked, and in doing so, promote the adoption of cashless transactions in a predominantly cash economy.

• NSDL Payment Bank

NSDL Payments Bank is a specialized payments bank in India dedicated to enhancing financial inclusion by offering a range of basic financial services. It provides essential banking services such as savings accounts, current accounts, fixed deposits, and recurring deposits. Additionally, it facilitates money transfers, bill payments, and mobile recharges, making everyday financial transactions easier for its customers. With a strong focus on digital services, NSDL Payments Bank leverages technology to ensure that its services are accessible and convenient. This digital-first approach helps to reach a wider audience, including those in remote and underserved areas, thereby promoting greater financial inclusion across the country.

• Paytm Payments Bank

Paytm Payments Bank is India’s mobile-first bank with zero balance-zero digital transaction charge accounts. Owned and governed solely by Indians, it was launched on May 23, 2017. Vijay Shekhar Sharma owns a majority stake in the company, with the remaining share owned by Indian firm One97 Communications Ltd. Paytm Payments Bank is building India’s digital bank with a mission and commitment to serving all underbanked and underserved Indians. It aims to bring half a billion Indians into the mainstream economy.