A bank account does not serve every customer in the same way. A migrant worker may need quick remittances and nearby cash access, while a rural household may value doorstep service. A small merchant may prioritize digital collections, bill payments, and an account without complex branch procedures.
This is where choosing the right payments bank in India requires more than comparing interest rates. Service reach, transaction charges, cash access, account limits, digital tools, and customer support can change the practical value of each option.
This blog examines:
- The current number of payments banks in India
- Active banks and their suitable use cases
- Available account and payment services
- Customer benefits and operating constraints
- Differences from conventional commercial banks
- RBI rules covering deposits, capital, investments, and lending
What is a Payments Bank
Under the RBI’s differentiated banking framework, a payments bank can accept limited customer deposits and provide transaction services, but it cannot lend those funds or issue credit cards.
A payments bank operates within four key licensing boundaries.:
- Customers can open savings and current accounts.
- Individual balances cannot exceed ₹2 lakh at day-end.
- The bank can issue debit or ATM cards.
- The bank cannot provide loans from its own books.
These restrictions determine the institution’s role. It manages deposits, transfers, remittances, and permitted payment activity without operating as a full-service lender.
A payments bank may also distribute fixed deposits, insurance, investments, or loans offered by another regulated institution. In such arrangements, the partner provides the financial product and carries the related obligation. The payments bank serves only as the access or distribution channel.
List of Payments Banks in India
As of June 2026, India has five active payments banks. Each follows the same RBI license limits, but their customer access models differ.
| Payments Bank | Main Access Channel | Distinct Offering | Best Suited For |
|---|
| Airtel Payments Bank | The Airtel Thanks application and more than five lakh banking points | Customers can combine mobile banking with assisted cash deposits, withdrawals, and account services | Users who want digital access with nearby in-person support |
| India Post Payments Bank (IPPB) | Mobile banking, post offices, postmen, and Gramin Dak Sevaks | Customers can request selected banking services at their doorstep | Rural households, senior citizens, pensioners, and customers who need assisted banking |
| Fino Payments Bank | FinoPay application, branches, and neighbourhood Fino Points | Customers can open and operate accounts through digital or assisted channels | Cash-dependent users, migrant workers, and customers near Fino merchant locations |
| Jio Payments Bank | JioFinance application | Customers can open and manage a zero-balance savings account through an app-led process | Users who prefer digital account opening and self-service banking |
| NSDL Payments Bank | NSDL Jiffy application | The Jiffy account supports paperless opening, UPI, transfers, bill payments, and a virtual RuPay debit card | Customers seeking a digital zero-balance account with virtual card access |
Paytm Payments Bank is not included because the RBI cancelled its banking licence in April 2026.
Features of Payments Banks
Payments banks offer a set of operational and technology features that enable deposits, payments, remittances, and account access within the RBI's differentiated banking framework.
- Excess Balance Sweep: With the customer’s prior consent, a payments bank can transfer any amount above the permitted balance limit to an account held with a partner commercial bank or small finance bank.
- Transaction Confirmation: Customers receive transaction records through SMS, email, printed receipts, account statements, or supported digital channels. These records help track failed, delayed, or disputed transactions.
- Assisted Banking Points: Payments banks can appoint business correspondents to offer permitted banking services. The payments bank remains responsible for transactions and customer complaints related to these authorized agents.
- Connected Transactions: Business correspondents must process deposits, withdrawals, and transfers through the bank’s live system. They cannot complete transactions offline and update them later.
- Digital Customer Verification: Payments banks may use video KYC or assisted video verification, subject to RBI requirements and the bank’s internal approval process.
- Deposit Insurance: Eligible deposits are protected by DICGC insurance up to ₹5 lakh per depositor, per insured bank, including principal and interest held in the same capacity.
Benefits of Payments Banks
The value of a payments bank comes from making everyday banking and payment activities more accessible, convenient, and secure for customers who do not require the full range of services offered by a conventional bank.
Quicker Remittances For Migrant Workers
Workers can send earnings directly to family members through a bank account instead of relying on cash couriers or informal transfers. The transaction creates a clear payment record and reduces the risk of money getting lost in transit.
Direct Access To Government Benefits
Eligible pensions, subsidies, wages, and welfare payments can be credited to a correctly seeded account through Direct Benefit Transfer. The customer receives the amount without waiting for manual cash distribution through several intermediaries.
Lower Cash Risk For Small Earners
Drivers, vendors, delivery workers, and shopkeepers can deposit part of their daily earnings instead of carrying the full amount. This reduces the risk of theft, loss, or accidental spending.
Better Collection Records For Micro-Businesses
A small merchant gains greater visibility into daily collections and cash flow. For example, a retailer processing 80 digital payments can reconcile credited amounts with billed transactions and identify discrepancies more easily before closing the day.
Easier Access To Basic Banking
Customers can access banking services closer to where they live or work, reducing travel time and making it easier to deposit cash, withdraw money, receive benefits, and complete everyday transactions.
Issues Faced By Payments Banks
Payments banks must process large volumes of small transactions while working within a tightly controlled earning model. This creates several financial and operational pressures.
Limited Returns From Customer Deposits
RBI requires payments banks to invest at least 75% of demand deposit balances in eligible government securities and Treasury Bills with maturities of up to one year. They may place only the remaining 25% in deposits with scheduled commercial banks. This structure supports liquidity but limits the income banks can generate from customer balances.
High Cost Of Assisted Banking
Agent-led services require commissions, cash management, monitoring, training, and dispute support. Payment processing also creates interchange expenses and NPCI switching charges. These costs become significant when customers make frequent transactions involving small amounts.
Dependence On Regular Account Usage
An inactive account creates onboarding and maintenance costs without producing steady transaction income. Payment banks, therefore, need customers to use their accounts regularly for transfers, collections, and other chargeable services.
Most customers can already make transfers, pay utility bills, and scan UPI codes through regular banking applications. A digital payments bank in India must compete through wider access, simpler account use, reliable systems, and services designed for customers who need local assistance.
Greater Technology And Fraud Exposure
Payments banks rely heavily on digital systems and distributed service networks. System failures, identity fraud, account misuse, and cyberattacks can interrupt operations and create financial losses. The RBI requires them to maintain operational-risk controls, secure technology systems, fraud monitoring, and incident-response processes.
How Payment Banks Differ From Normal Banks
Payment banks and conventional commercial banks operate under different RBI licenses. A payments bank primarily supports deposits and transactions, while a conventional bank can offer a broader range of services, including savings, long-term deposits, and credit.
| Comparison Point | Payments Bank | Conventional Commercial Bank |
|---|
| Licence Scope | Operates under a differentiated banking licence with a limited business scope | Operates under a broader licence covering deposits, payments, and lending |
| Deposit Products | Accepts demand deposits through savings and current accounts | Offers savings, current, fixed, recurring, and other permitted deposit products |
| Use of Deposits | Places customer funds in assets permitted under the payments-bank framework | Uses deposits for lending and investments within applicable prudential rules |
| Credit Facilities | May distribute credit products supplied by an external lender | Can provide loans, overdrafts, and cash-credit facilities from its own books |
| Income Model | Earns mainly through transaction fees, distribution income, and returns from permitted investments | Earns through lending spreads, service charges, investments, and other banking activities |
| Customer Relationship | Supports transaction-led banking with a restricted product range | Supports deposits, payments, borrowing, and wider financial requirements |
Let’s understand this with an example: A small garment unit may use a payments-bank current account to receive customer payments and pay routine business expenses. If the owner needs ₹6 lakh for new machines or short-term working capital, the payments bank cannot provide that loan from its own books. The business must approach a conventional bank, NBFC, or another authorized lender.
Regulations For Payments Banks in India
RBI applies separate capital, ownership, governance, product, and access-point rules to payments banks.
Minimum Capital Requirement
The payments bank's minimum capital requirement is ₹100 crore in paid-up equity. The promoter must contribute at least 40% of this capital for the first five years from the date the bank begins operations.
Capital Adequacy Standards
Payment banks must maintain:
- A minimum total capital ratio of 15%
- Common Equity Tier 1 capital of at least 6%
- Total Tier 1 capital of at least 7.5%
- A leverage ratio of at least 3%
Under the leverage requirement, outside liabilities cannot exceed 33.33 times the bank’s net worth.
Ownership And Governance Rules
RBI’s ownership and control rules for private-sector banks also apply to payments banks, except where the licensing framework provides specific conditions. Board composition, committees, remuneration policies, internal controls, audits, and compliance systems must follow the applicable banking requirements. Foreign investment remains subject to the prevailing policy for private-sector banks.
Product Intimation And RBI Oversight
A license applicant must submit a clear list of the financial products it plans to offer. After obtaining a license, the bank must inform the RBI about any proposed new product. RBI may restrict the product’s design or functioning and can direct the bank to discontinue it.
Physical Access Point Requirements
For the first five years, payments banks need RBI approval for their annual plans to open physical access points. The first plan must be submitted to the RBI before the bank starts operations. At least 25% of physical access points must operate in rural centers. The bank must also maintain a fixed district-level location, known to customers, for complaint handling and agent supervision.
Conclusion
Choosing a Payments bank in India requires a clear view of what the account can support and where its limits begin. These banks work well for small deposits, transfers, cash access, and everyday payments, but they do not replace a conventional bank for loans or wider credit needs. The right option should match the customer’s location, transaction habits, service access, and cost expectations. Current RBI status, official charges, and available support should guide the final decision.
FAQs
1. Can a minor open a payments bank account?
A minor can open an eligible account when the bank’s product rules allow it. IPPB permits certain accounts for individuals aged 10 and above, while Airtel requires parental consent and a guardian-led nomination for its minor accounts.
2. Can a payments bank account include a nominee?
Payments-bank deposit accounts can include a nominee where the product permits nomination. The account holder may usually add, change, or cancel the nomination, helping the bank settle the balance after death through the prescribed claim process.
3. Can two people open a joint payment bank account?
Joint-account availability depends on the bank and account type. IPPB’s regular savings account, for example, operates only in one person’s name. Customers should check the specific product terms before assuming that joint ownership is available.
4. Do payment banks provide cheque books?
Cheque-book access is not a standard feature across payment banks. Some current-account products may support it later, while others remain fully digital. Customers should verify cheque issuance, clearing availability, charges, and eligibility in the bank’s latest schedule.
5. Can salary be credited to a payments bank account?
Salary credits can be accepted when the bank offers a salary account arrangement or permits employer transfers to the selected account. Product benefits, conversion rules, and charges may change if regular salary credits stop for a defined period.
6. What happens when a payments-bank account holder dies?
When a valid nomination exists, the nominee can request settlement by submitting the prescribed claim form, identity proof, and death certificate. Without a nominee, the bank pays eligible legal heirs after completing its documented claim process.
7. What happens when a payment bank account becomes inactive?
A savings or current account may become inoperative after more than two years without customer-induced transactions. The customer can seek reactivation by completing the bank’s due diligence process and providing updated identification or account information where required.
8. Can one person hold accounts with multiple payment banks?
An individual may hold accounts with different payment banks, subject to each bank’s KYC, eligibility, and product conditions. Restrictions may still apply within the same bank, especially where a basic savings account permits only one account category.
9. Can payment banks receive money from abroad?
Foreign inward remittances require an RBI-permitted arrangement and support from the receiving bank. A payments-bank account cannot automatically accept every overseas transfer, so customers should confirm the remittance channel, purpose, currency handling, charges, and beneficiary requirements.
10. What documents are needed to open a payments bank account?
Account-opening documents vary by bank and KYC method. Customers commonly need Aadhaar, PAN, or Form 60, a registered mobile number, and identity verification. Business accounts may require registration, address proof, business records, and authorized-signatory documents.
