By Elton Gomes
Jio Payments Bank began its banking services from Tuesday, according to media reports. With the launch of the new service, the Mukesh Ambani-led Jio Infocomm looks to further its hold over Indian consumers.
The payments bank is a 70-30 joint venture between Reliance Industries and the State Bank of India.
What does this means for Indian consumers?
The move is indicative of Ambani’s hopes—that the company’s feature phone launched in 2017, may accelerate transactions at Jio’s new payments bank. Ambani likely plans to create an inclusive digital banking environment—a super fast 4G phone, capable of lending banking services.
The bank has stated that it will allow account holders to deposit up to Rs 1,00,000. There is a possibility that this amount may be raised. However, no official statement regarding this matter has been issued yet. Analysts are of the opinion that Jio’s payments bank has the potential to be a market disruptor. The payments bank would significantly propel Jio’s holistic connectivity.
Finance Minister Arun Jaitley previously stated that payments bank can have a “multiplier impact,” on the economy. It appears that Jio ambitious expansion could impact other areas, as payments bank also cater to small savings accounts.
Recently, several payments banks have partnered with retail stores, post offices, fuel stations and others, in efforts to become more accessible to the public than conventional banks. By launching the payments bank service, Jio might just be visible in every Indian household.
What is a payments bank, and what are its benefits?
A payments bank is similar to any other regular bank. However, payments bank operate on a smaller scale, without involving credit risk. Such services can also conduct major banking operations, but they cannot issue loans or credit cards.
What a payments bank can do, is accept demand deposits up to Rs 1 lakh. Additionally, it can offer remittance services, and mobile payments/transfers/purchases. Payments banks can also offer ATM/debit cards, net banking and third party fund transfers.
A payments bank can also allow customers to maintain a zero balance account. This is unlike other commercial banks that charge customers if they fail to maintain a minimum balance in their account. Additionally, payments banks offer zero balance accounts without any extra charge. Furthermore, most payments banks continue to operate beyond normal banking hours, making it easier for customers to access services, especially in emergency situations.
Since payments banks are slowly gaining ground in India, Jio has the potential to become one of the top players in the market. Jio’s telco rival Bharti Airtel began the first payments bank in India in November 2016. Finance company FINO started its payments banks services in June 2017, and February 22, 2018, saw the start of Aditya Birla group’s Idea Payments Bank.
Paytm, which enjoyed substantial success in the aftermath of demonetisation, launched a payments bank in May 2017. As Paytm seems to have a holistic presence in digital payments, it remains to be seen what strategy Jio may use to gain a foothold in the digital payments market.
As the focus of payments banks is high-volume, seamless transactions in a fast-paced environment, Jio Infocomm, with its seamless 4G connectivity, might have taken a significant step in the right direction. Adding to its presence in several industries like petroleum, natural gas, entertainment, retail, media, education, and healthcare, Jio Infocomm seems to already have an efficient and holistic network in place.
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