India’s financial landscape has evolved significantly over the years, with innovative banking solutions emerging to cater to the diverse needs of its population. Among these, payment banks have stood out as a transformative force, bridging the gap for the unbanked and underserved sections of society. Designed to provide basic banking services with a focus on convenience and accessibility, payment banks have become a crucial part of India’s push for financial inclusion. 

In this blog, we’ll explore the top 5 payment banks in India, their unique features, and how they operate. Whether you’re looking for a reliable bank to open a savings account or simply curious about their role in the financial ecosystem, this guide will help you understand everything you need to know about payment banks. 

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What Are Payment Banks? 

Payment banks are a unique type of bank introduced by the Reserve Bank of India (RBI) to cater to specific financial needs, especially for individuals and small businesses. They are designed to offer basic banking services like deposits, remittances, and utility payments while promoting digital transactions. By focusing on basic banking services through digital-first platforms, payment banks aim to simplify banking and reach the most remote corners of the country. 

How Do They Work? 

Payment banks operate under strict guidelines set by the RBI, which differentiate them from traditional banks.  

  • Deposits: Payment banks accept deposits up to ₹2 lakhs per customer. 

  • No Lending: Unlike traditional banks, they cannot issue loans or credit cards. 

  • Digital First: These banks rely heavily on mobile and online platforms to provide services, ensuring convenience and accessibility for users. 

  • Revenue Model: They earn revenue through service fees, transaction charges, and partnerships with other financial institutions. 

Key Regulatory Framework 

  • Licensing and Regulation: Payment banks are licensed under Section 22 of the Banking Regulation Act, 1949, and are regulated by the RBI.  

  • Capital Requirements: They must maintain a minimum capital adequacy ratio of 15%, with a Common Equity Tier 1 capital of at least 6%.  

  • Deposit Limits: Initially, payment banks were restricted to holding a maximum balance of ₹1 lakh per individual customer. This limit was increased to ₹2 lakh in April 2021.  

  • Investment Norms: They are required to invest a minimum of 75% of their demand deposit balances in government securities or Treasury Bills with maturities up to one year.  

  • Operational Restrictions: Payment banks are prohibited from issuing credit cards and cannot engage in lending activities. They are also not permitted to set up subsidiaries to undertake non-banking financial services.  

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Which are the Top 5 Payment Banks in India 

1. Airtel Payments Bank 

Airtel Payments Bank was the first payment bank to commence operations in India. It was established in January 2017, with headquarters in New Delhi. It aims to provide accessible and efficient banking services, especially to underserved and unbanked populations.  

Airtel Payments Bank continues to innovate and expand its services, contributing significantly to India's digital banking landscape and financial inclusion efforts. 

Key Features and Services: 

  1. Savings Accounts: Offers zero-balance savings accounts with interest rates up to 7% per annum, providing customers with a convenient and rewarding banking experience.  

  1. Digital Payments: Facilitates seamless digital transactions through the Airtel Thanks App, enabling users to pay bills, recharge services, and transfer funds effortlessly.  

  1. FASTag Services: Provides FASTag issuance and recharge options, allowing for cashless toll payments across national highways, enhancing the travel experience for commuters.  

  1. Insurance Products: In collaboration with Bharti AXA Life Insurance, offers term insurance plans, including the Pradhan Mantri Jeevan Jyoti Bima Yojana, promoting financial security among its customers.  

  1. Extensive Banking Points: Boasts a vast network of over 500,000 neighborhood banking points, ensuring widespread accessibility to banking services across urban and rural areas.  

2. India Post Payments Bank 

India Post Payments Bank continues to play a pivotal role in transforming the banking landscape by integrating traditional postal services with modern banking solutions, thereby fostering financial inclusion and empowerment. 

Launched in September 2018 and headquartered in New Delhi, India Post Payments Bank (IPPB) leverages the extensive postal network to provide accessible banking services across the nation. As a government-owned entity under the Department of Posts, IPPB focuses on promoting financial inclusion, especially in rural and underserved areas.  

Key Features and Services: 

  1. Savings Accounts: Offers various savings account options, including Regular, Digital, and Basic Savings Accounts, catering to diverse customer needs. These accounts come with features like zero balance requirements and easy accessibility.  

  1. Doorstep Banking: Utilizes the vast network of postmen and Grameen Dak Sevaks to provide banking services at customers' doorsteps, ensuring convenience for those in remote locations.  

  1. Digital Banking Services: Provides a user-friendly mobile banking app and internet banking platform, enabling customers to manage accounts, transfer funds, and pay bills seamlessly.  

  1. Third-Party Products: Offers insurance products, loans, and investment options in collaboration with various financial partners, enhancing the range of services available to customers.  

  1. Extensive Reach: With over 155,000 post offices and 300,000 postal employees, IPPB ensures widespread accessibility, making banking services available in the most remote corners of the country.  

3. Fino Payments Bank 

Fino Payments Bank continues to innovate and expand its services, contributing significantly to India's digital banking landscape and financial inclusion efforts. 

Established in April 2017 and headquartered in Mumbai, Fino Payments Bank is a subsidiary of Fino Paytech Limited. The bank focuses on providing accessible and user-friendly banking services to underserved and unbanked populations across India. 

Key Features and Services: 

  1. Savings Accounts: Offers a range of savings accounts, including the Shubh Savings Account, which provides customers with benefits like a free debit card and rewards on everyday transactions.  

  1. Current Accounts: Provides current account options tailored for businesses, featuring zero balance requirements and a RuPay Debit Card to facilitate seamless transactions.  

  1. Digital Banking: Through the FinoPay mobile application, customers can access services such as fund transfers, utility bill payments, and mobile recharges, ensuring banking convenience at their fingertips.  

  1. Extensive Network: Operates over 724,671 banking outlets, 54 branches, and 130 customer service points, covering 90% of India's districts, thereby ensuring widespread accessibility.  

  1. Insurance Products: Offers insurance services, including shop insurance, providing customers with comprehensive financial solutions beyond traditional banking.  

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4. Jio Payments Bank 

Jio Payments Bank bridges the gap between technological innovation and traditional banking methods by offering a variety of efficient banking services tailored to their vast customer base. 

Launched in April of 2018 through a joint venture between Reliance Industries Limited and the State Bank of India with headquarters in Navi Mumbai, the bank's founding principle was to seamlessly fuse advanced digital systems within standard banking practices in an effort to boost widespread financial inclusion across India. 

Key Features and Services: 

Digital Savings Accounts: Offers instant account opening through the JioFinance app, providing customers with a seamless and paperless banking experience.  

  1. High-Interest Rates: Provides competitive interest rates on savings accounts, encouraging customers to save more.  

  2. Biometric Authentication: Utilizes biometric verification for secure and convenient access to banking services, ensuring enhanced security for customers.  

  3. Comprehensive Payment Solutions: Enables bill payments, mobile recharges, and money transfers through a user-friendly digital platform, simplifying financial transactions for users.  

  4. Integration with Jio Ecosystem: Leverages the extensive Jio network to offer a wide range of services, including UPI transactions and digital wallets, providing a holistic financial solution.  

5. NSDL Payments Bank 

Are you looking for a digital payments bank that combines digital solutions with a customer-centric approach? NSDL Payments Bank aims to do just that. It makes banking more accessible and efficient for all segments of the population, thereby contributing to the broader goal of financial inclusion in India. 

Established in October 2018 and headquartered in Mumbai, NSDL Payments Bank is a subsidiary of the National Securities Depository Limited (NSDL), India's first and largest depository. The bank leverages NSDL's extensive experience in the financial sector to offer a range of digital banking services aimed at enhancing financial inclusion across the country. 

Key Features and Services: 

  1. Digital Savings Accounts: NSDL Payments Bank offers zero-balance savings accounts that can be opened entirely online through their mobile application, NSDL Jiffy. This process is designed to be quick and user-friendly, eliminating the need for physical paperwork or branch visits.  

  2. Debit Cards: Customers receive a free virtual debit card upon account opening, which can be used for online transactions. Additionally, there is an option to request a physical debit card for ATM withdrawals and in-store purchases.  

  3. Fund Transfers: The bank facilitates seamless money transfers through Immediate Payment Service (IMPS) and National Electronic Funds Transfer (NEFT), allowing customers to send and receive funds efficiently.  

  4. Bill Payments and Recharges: Through the NSDL Jiffy app, users can pay utility bills, recharge mobile phones, and manage other recurring payments, streamlining their financial transactions.  

  5. Investment Services: NSDL Payments Bank enables customers to invest in mutual funds directly through their platform, providing a convenient avenue for wealth management.  

  6. Extensive Network: The bank has a widespread network of Business Correspondent (BC) agents and Customer Service Points (CSPs) across India, ensuring that even customers in remote areas have access to essential banking services.  

What are the Services Offered by Payment Banks?  

1. Savings and Current Accounts 

  • Savings Accounts: Customers can open zero-balance savings accounts with competitive interest rates, making it easier to save money. 

  • Current Accounts: Tailored for businesses, these accounts facilitate seamless transactions and operational efficiency. 

2. Digital Banking 

  • Payment banks provide robust mobile and internet banking platforms for fund transfers, bill payments, and other financial transactions, ensuring 24/7 accessibility. 

3. Fund Transfers 

  • Support for real-time payment systems like Immediate Payment Service (IMPS), Unified Payments Interface (UPI), and National Electronic Funds Transfer (NEFT) for smooth and instant money transfers. 

4. Utility Bill Payments and Recharges 

  • Customers can pay utility bills, recharge mobile phones, and manage other recurring expenses through user-friendly apps and digital platforms. 

5. Debit Cards and ATM Services 

  • Issuance of RuPay or other debit cards to facilitate cash withdrawals, in-store purchases, and online transactions. 

6. FASTag Services 

  • Many payment banks offer FASTag issuance and recharge services, enabling cashless toll payments and promoting digital infrastructure. 

7. Insurance and Investment Products 

  • In collaboration with financial institutions, payment banks offer simple insurance products (e.g., term insurance) and investment opportunities like mutual funds, catering to financial security and growth needs. 

How to Open a Payments Bank Account in India? Step-by-step guide: 

Payments Banks offer their services online. One can easily open an account through their website or mobile app.  

  • Choose a payment bank based on services offered. 

  • Visit their official website or app. 

  • Submit necessary documents for KYC verification. 

  • Complete the account activation process online or offline. 

Documents Needed to Open a Payment Bank Account 

  • Aadhaar card 

  • PAN card 

  • Passport-sized photographs 

  • Proof of address and proof of identity 

  • Mobile number linked with Aadhaar 

FAQs on Best Payment Bank in India 

1. How many payments banks are there in India?

India currently has 5 payments banks: Airtel Payments Bank, India Post Payments Bank, Fino Payments Bank, Jio Payments Bank, and NSDL Payments Bank. 

2. What is the maximum amount I can deposit in a payment bank account? 

You can deposit up to ₹2 lakhs in a payment bank account, as per RBI guidelines. 

3. Can I get a loan or credit card at payment banks? 

Unfortunately, no. Payment banks are restricted to providing basic banking services like deposits and remittances. They do not offer credit cards or loans.  

4. How secure are payment bank transactions? 

Payment bank transactions are highly secure, as they follow RBI regulations and use advanced encryption technology to protect your data. 

5. Are payment bank services available in rural areas? 

Yes, payment banks have a strong presence in rural areas, often using extensive networks like post offices and local banking agents to provide services. 

6. Can I transfer money internationally using payment banks? 

No, payment banks are not authorized to facilitate international money transfers. They are limited to domestic transactions. 

7. What is the difference between a payment bank and a digital wallet? 

Payment banks allow you to open savings accounts, earn interest, and use services like fund transfers and debit cards. Digital wallets, on the other hand, are primarily for storing money and making quick online or mobile payments.