Airtel Rolls Out India’s First Payments Bank With Hefty 7.25% Interest On Savings Accounts

Heralding the era of payments banks, Airtel on Wednesday rolled out a pilot of its banking services in Rajasthan. Airtel Payments Bank Ltd. is the first payments bank to go live with over 10,000 retail outlets across the state functioning as banking points, the company said in a media statement.

The bank will offer a hefty interest rate of 7.25 percent to customers on their saving deposits. The high rate of interest could now be emulated by other payments banks set to launch next year that may want to better or at least match Airtel Bank’s rate.

Generally banks offer an interest rate of 4 percent on savings bank account deposits and some private banks have offered up to 6 percent on such accounts.

Airtel said it plans to increase its merchant network in the state to 1 lakh by the end of the year.

Airtel Bank claims to be completely digital and paperless. Customers can transfer money to other banks, withdraw or deposit cash at Airtel merchant outlets and also avail a personal accident insurance of Rs 1 lakh when opening a savings account.

Rajasthan Chief Minister Vasundhara Raje said the initiative will be a “boon to residents in far-flung areas” who have no access to formal banking.

In order to sign up with Airtel Bank, a customer needs an Aadhaar number which will be used to complete the e-KYC (know your customer) process. The Airtel phone number will also serve as the bank account number.

With 325 million subscribers Airtel is the largest network in the country and the third largest in the world.

Airtel Bank is just the first of a number of payments banks which will start operations in the next financial year. Last year, the Reserve Bank of India gave “in-principle” approval to 11 applicants for payments banks but three entities surrendered their licences thereafter, leaving eight players in the fray.

Airtel Bank will be headed by Shashi Arora who said in the media statement that the bank is “committed” to the government’s vision of financial inclusion for all citizens.