After multiple delays and an equal number of capital infusions, Paytm’s much awaited payments bank — the third in the country after Airtel’s and India Post’s — is finally live. The access however, is currently by invitation only and the bank is offering a 4% interest rate on opening a savings account.
Payments bank is a differentiated bank and a rather new phenomenon in India’s financial services and banking space, wherein an account holder is allowed to open accounts with a deposit limit of upto 1 Lakh.
Apart from Paytm’s latest addition to the Payments bank list, India already has two other payments banks functioning, one under Airtel, while the other one under the revamped and modernised, India Post. As for Paytm’s Payments bank, it is offering services by invitation only.
The Paytm Payments Bank will be spearheaded by Renu Satti, who has been appointed as the chief executive of this spin-off entity. It was previously being said that Shinjini Kumar, a former central banker and senior executive at PwC, has been hired as the CEO of the stated business. But, it is presently unclear as to when the said leadership changes were made.
So how exactly does this new “Payments bank” work ? And what are the interest rates, debit card policies (yes, there’s that as well) and other services ? Lets go through them in detail below.
Interest Rates
As mentioned already, Paytm Payments Bank will offer a 4% interest on savings account you open with them. This however, is strikingly low when compared with Airtel’s Payments bank, which offers a 7.% interest rate on a savings deposit — almost double of that offered by conventional banks. India Posts’s interest rates hover between 4 to 4.5%.
Both Paytm and India Post are offering savings interest in the vicinity of what conventional banks offer — which stands in the range of 4% to 5%, for all major banks.
Cash Withdrawal limits and charges
While one may think of Paytm loosing out on the interest rates battle (though its rates are in line with traditional banks and won’t hurt it much), the company’s cash withdrawal charges are extremely well targeted. You are charged a fixed amount for withdrawals — five free transactions in non-metro cities and three free transactions in a metro city. Thereafter, you will be charged ₹20 for each cash withdrawal and Rs5 for non-financial transactions like taking out a mini statement.
For a physical statement, you will need to pay ₹50 plus delivery charges.
Comparing with Airtel payments bank, it charges 0.65% of the withdrawal amount, which in most cases, will be more than Paytm’s flat rates.
Debit Cards, Cheques and Online Fund Transfer.
Paytm Payments Bank will provide you RuPay debit cards, at an annual subscription cost of ₹100 plus delivery charges. If you loose it, you will end up paying ₹100 plus delivery charges to get it replaced. A ten-leaves cheque book will cost ₹100 plus delivery charges.
For online fund transfers, you can do all that you with traditional banking. Paytm Payments bank provides options to do Immediate Payment Service (IMPS), Unified Payment Interface (UPI) and National Electronic Fund Transfer (NEFT) free of cost.
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