Airtel launches India's first payments bank
India’s ongoing, audacious project to bring banking and financial services to much of its population hit a major milestone today; the country’s first payments bank is now live.
Airtel, India’s largest telecom network, with over 260 million subscribers, today announced the launch of Airtel Payments Bank. At a media event Thursday, the company committed an initial investment of 30 billion Indian rupees ($440 million) to bring its service across India.
The conglomerate said its service is now functional in all 29 states of India, adding that its 250,000 retail stores across the nation will serve as banking points. The company began testing its service last November in Rajasthan. Over 1 million customers joined the network during the pilot phase, it said today.
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The payment bank is an initiative from the Indian government, first unveiled in 2014, that cuts the need of going to traditional banks and makes nearly every bank operation accessible from a smartphone.
Under this initiative, anyone can open a bank account using their Aadhaar based e-KYC information. Aadhaar is another bold initiative from the Indian government that ties all of people’s information with their fingerprint and iris-scan data.
Over one billion people in India have already enrolled themselves in the Aadhaar program (Aadhaar is Hindi for foundation). Thanks to this, a person interested in opening an account with Airtel Payments Bank (or any other payments bank) won’t need paper documentation.
Through this move, the government seeks to bring digital banking services to much of the country’s unbanked population. In 2015, it gave an an in-principle approval to 11 of the 41 applicants who had applied to set up their own payments bank.
To lure customers, Airtel is offering an interest of 7.25 percent per annum on savings account deposits. This compares to the 4 percent interest rate on deposits that most public and private sector banks offer. Furthermore, there will be no processing fee for customers and merchants partners for digital transactions on the network.
Additionally, Airtel is offering Payments Bank users one minute of free talk time on its telecom network for every rupee deposited to their savings account. It is also offering free personal accidental insurance worth $1500 to all savings account holders.
Airtel Payments Bank is now available on Android and iOS. The company said customers would also get access to a MasterCard-powered online card to seamlessly make payments across all online merchants accepting MasterCard.
Other applicants that have received approval are also working on their payments bank. Paytm, India’s largest mobile wallet service, recently received final approval from the RBI to launch its payments bank. The company expects to launch its payments bank next month.
