Aditya Birla Idea Payments Bank starts operations

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The entity will compete with Airtel, Paytm and Fino to get India’s unbanked population online.
Aditya Birla Idea Payments Bank starts operations
Photo by Alamy 

Aditya Birla Idea Payment Bank Limited is the latest entity to begin its payments bank operations, since the Reserve Bank of India (RBI) issued 11 in-principal approvals in 2015.

The payments bank is a 51:49 joint venture between Aditya Birla Nuvo Ltd (ABNL) and telecom major Idea Cellular.

Bharti Airtel was the first to begin its payment bank operations in November 2016, followed by Paytm Payment Bank and Fino Payment Bank Limited, last year. The Department of Post has also got a licence from the RBI, and it is set for a country-wide roll-out in April.

A payment bank is a differentiated bank. It allows customers to open a savings account with deposits of up to Rs 1 lakh. These banks are allowed to offer remittances services, mobile payments, transfers/purchases and other banking services like ATM/debit cards, net banking and third party fund transfers. However, unlike traditional banks, they are not allowed to lend money to their customers.

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Setting up of payment banks was first recommended by a committee under the chairmanship of Nachiket Mor, an RBI board member, for improving financial inclusion in the country especially among the migrant labour workforce, low-income households, small businesses and unorganised sector entities.

Recently, payments banks came under the scanner after the Unique Identification Authority of India (UIDAI) temporarily banned Airtel Payments Bank for flouting Aadhar norms. In response, the RBI has issued new KYC norms. It directed payments banks to get their customers’ information verified by third parties.

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