Jio Payments Bank launched: Here's everything you should know
What's the story
Jio Payments Bank, a 70:30 joint venture between Mukesh Ambani-led Reliance Industries Ltd. and State Bank of India, started its operations on Tuesday. Reportedly, H. Srikrishnan, who has earlier worked with the HDFC Bank and Yes Bank, has been appointed as Managing Director and CEO of Jio Payments Bank. Here's all you should know about Jio Payments Bank, its benefits and its competitors.
Foray into banking
Everything to know about Jio Payments Bank
Mukesh Ambani-led Reliance Industries Ltd. was one of the 11 applicants which were issued 'in-principle approval' for setting up a payment bank by the Reserve Bank of India in 2015. Later in March 2017, Reliance received the license to start its operations. Notably, for opening an account with the Jio Payments Bank, customers would be required to submit their 12-digit Aadhaar numbers.
Jio's competitors
Payments banks in India
Bharti Airtel owned Airtel Payments Bank was the first one to start payments bank services in India in November 2016. Later in 2017, India Post also launched its payments bank followed by Paytm and others including Vodafone m-Pesa, Fino Payments bank. Most recently, Aditya Birla group's Idea Payments Bank started its operations on February 22 this year followed by Jio Payments Banks.
Key differences
Traditional Banks vs Payments Banks
Unlike traditional banks, payments banks can only receive deposits of up to Rs. 1 lakh per customer and cannot provide credit/loans. Furthermore, all payments bank accounts are zero-balance accounts and customers are not required to maintain a minimum balance. Lastly, given payments banks are mobile technology driven, account-opening process with them is much simpler, quicker and paperless.
Data
Payments banks also offer interest on savings and fixed accounts
Like all commercial banks, payments banks also offer interest on your savings and fixed accounts. Currently, Airtel payments bank offers the highest interest rate of 7.25% on savings account while Paytm payments bank offers 4% on a savings account and 7% on fixed deposits.
Banking for all
Benefits of a payments bank
The Central government has recently announced that "Payments Banks and Small Finance Banks" will offer social security scheme 'Atal Pension Yojana' to their customers. Moreover, acknowledging the power of mobile technology, Finance Minister Arun Jaitley said payments banks will cast a "multiplier impact" by offering banking services to people in remote areas and at lower costs to eventually compete with traditional banks in future.