Airtel Payments Bank launched nationwide operations, offering 7.25% interest on savings bank balances, which is more than the maximum 7% paid by SBI on its fixed deposits.
The only catch is that the payments banks, which do not offer loans and several other facilities offered by full fledged rivals, are not allowed to accept deposits beyond Rs.1 lakh in bank accounts, which will have the same number as your mobile number. Bharti Airtel chairman Sunil Bharti Mittal said that the higher interest rate and freebies such as life insurance of up to Rs 1 lakh was an “introductory offer“ and the rates would go down in a falling interest rate environment.
Only a few years ago, RBI had removed the 4% cap on savings bank deposits, prompting “newcomers“ such as Kotak Mahindra and Yes Bank to offer 6-7% to their account holders on idle balances in savings bank accounts. But that did not result in account holders shifting banks to earn more. Mittal said Bharti and Kotak Mahindra, which holds a 20% stake in the payments bank, would invest Rs.3,000 crore in the venture.
Mittal said that just as mobile telephony leapfrogged traditional telecom networks to take affordable telecom services deep into the country , Airtel Payments Bank aims to take digital banking services to the unbanked over their mobile phones in a quick and efficient manner. Bharti holds 80% stake in the payments bank, and the rest is held by Kotak Mahindra Bank.