Payment banks is an Indian new model of banks conceptualised by the Reserve Bank of India. Payment banks have been created to help India reach its financial inclusion targets.
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This type of bank can be highly useful for migrant labourers, low income households, small business and other unorganised sector entities. Financial inclusion is where individuals and businesses have access to useful and affordable financial products and services that meet their needs that are delivered in a responsible and sustainable way. Financial inclusion is defined as the availability and equality of opportunities to access financial services. With the aim of expanding banking services in the country, RBI has developed a special category of banks to provide comprehensive financial services to small business and low income families. They are authorised to offer a limited range of services to its customers which include providing remittance and receiving payments. Hence, it is of great interest to analyse the role of payment banks to find out the effect of financial inclusion through payment banks. Hence this topic is selected for the study.
INTRODUCTION
Payments banks are a new model of banks conceptualized by The Reserve Bank of India (RBI). These banks can accept a restricted deposit which is currently limited to INR 1 lakh per customer and may be increased further. These banks cannot issue loans and credit cards. Both current account and savings accounts can be operated by such banks. Payments banks can issue services like ATM cards, debit cards, online banking and mobile banking. Airtel has launched India's first live payments bank. Paytm is the second such service to be launched in the country. Payments Banks will magnify the potential of financial inclusion in the economy. It will empower those citizens who have only transacted in cash, to head towards formal banking. Traditional banks may be hesitant to open branches in every village due to its uneconomic returns, but simple mobile phone coverage is all that is required now.
OBJECTIVES
- To study about the effectiveness of payment banks in providing financial services in comparison to commercial banks.
- To evaluate the level of satisfaction of customers on various services offered by payment banks.
- To analyze the relative strength of payment banks in financial inclusion of marginalized sections of the society.
- To make suggestions for improving the effectiveness of payment banks.
STATEMENT OF PROBLEM
A large number of people around the world still remain without access to basic banking and financial services. Here comes the need for financial inclusion, which means that individuals and businesses have access to useful and affordable financial products and services that meet their needs such as transactions, payments, savings, credit and insurance. It is widely recognized as one of the most important engines of economic development. There are a number of barriers faced by the banks that would conventionally be asked with the job of increasing financial inclusion around the world. A large proportion of people lack financial literacy and are not interested in the benefits they may receive from banking services. With the aim of expanding banking services in the country, RBI has developed a special category of banks to provide comprehensive financial services to small business and low income families. They are authorized to offer a limited range of services to its customers which include providing remittance and receiving payments. Hence, it is of great interest to analyze the role of payment banks to find out the effect of financial inclusion through payment banks.
SIGNIFICANCE OF THE STUDY
Payment banks have been created to help India reach its financial inclusion targets. This type of bank can be highly useful for migrant laborer's, low income households, small business and other unorganized sector entities. The study investigates how newly licensed payment banks can favorably achieve inclusion goals of the Indian Banking Regulator by engaging with marginalized and migrant groups within the population. The role of digitization in making basic financial services available to such excluded groups is going to be explored within the study. In addition, the study attempts to critically assess the competitive implications that payment banks will have on the existing banks.
METHODOLOGY
This study was undertaken with a main objective of studying the effectiveness of payment banks in financial inclusion. The present study is analytical and descriptive in nature and uses both primary and secondary data. The present study has been conducted among the customers of payment banks in Thiruvananthapuram district. It represents the total number of customers of payment banks in Thiruvananthapuram district. From the population, 50 customers are selected as respondents for the study. So the sample size is restricted to fifty. Primary data have been collected from the customer of payment banks. Secondary data have been collected from journals, Newspapers, internet etc. The sampling technique used in this study is Convenient sampling. Data is collected through a structured interview schedule. The variables selected for analysis of the responses is age, sex, marital status, social category, and level of education.
ANALYSIS AND INTERPRETATION OF SURVEY RESULTS
The data collected are analyzed on the basis of the following objectives; business and low income families in comparison to commercial banks.
- To evaluate the level of satisfaction of customers on various services offered by payment banks
- To analyze the relative strength of payment banks in financial inclusion of marginalized sections of the society
- To make suggestions for improving the effectiveness of payment banks, as a tool for financial inclusion To study the effectiveness of payment banks in providing financial services to small business and low income families in comparison to commercial banks.
- To evaluate the level of satisfaction of customers on various services offered by payment banks
- To analyze the relative strength of payment banks in financial inclusion of marginalized sections of the society
- To make suggestions for improving the effectiveness of payment banks, as a tool for financial inclusion.
PAYMENT BANKS - AN OVERVIEW
Payment Banks
Payments banks are a new model of banks conceptualized by the Reserve Bank of India (RBI). These banks can accept a restricted deposit which is currently limited to INR 1 lakh per customer and may be increased further. These banks cannot issue loans and credit cards. The need for Payment Banks was felt because India has around 94 crore mobile subscribers which is approximately 75% of the population of 125 crore but if we see the number of bank accounts this figure comes down to 60 crore that is around 50% of the population. Most of the unbanked people live in the rural area and are poor people or small businessman. So from financial inclusion point of view, this model seems to be a good concept. List of Payment Banks in India The following is the list of 11 applicants who got “in-principle” approvals to open a payment bank in India.
1. Aditya Birla Nuvo Limited (Idea Cellular)
2. Reliance Industries (Joint venture : 70% RIL, 30% SBI)
3. Airtel M Commerce Services Limited
4. Vijay Sekhar Sharma (PayTM)
5. Cholamandalam Distribution Services Limited
6. Department of Posts (India Post)
7. FinoPayTech Limited
8. National Securities Depository Limited (NSDL)
9. DilipShantilalShanghvi (Sun Pharma)
10. Tech Mahindra Limited
11. Vodafone M-Paisa Limited
Aditya Birla Nuvo Ltd.
RBI had given an in-principle approval to set-up the Payments Bank to Aditya Birla Nuvo Limited (ABNL), as promoter on 7th September, 2015. The proposed Payments Bank will be a 51:49 joint venture (JV) between ABNL and Idea Cellular. The JV will apply to RBI for the final grant of license which will be subject to fulfilment of certain regulatory pre-requisites. The JV partners in the meantime are gearing to launch Consumer Services by the second half of the Calendar Year 2016 and intend to capitalize on the strength of Idea ' s 2 Million+ retail distribution channel across 375,000 towns & villages and ABNL ‟ s experience of successfully promoting and scaling up a number of consumer centric businesses. Aditya Birla Group ' s payments bank, known as Aditya Birla Ide a Payments Bank has commenced operations with effect from February 22, 2018. The bank has joined the bandwagon of payments bank run by companies such as Bharti Airtel, Paytm, India Post and Fino Payments Bank.
Reliance Industries
RelianceIndustries Ltd was one of the 11 applicants which were issued in-principle approval for setting up a payments bank in August 2015. Jio Payments Bank Limited has commenced operations as a payments bank with effect from April 3, 2018. Jio Payments Bank is a joint venture between Reliance Industries, which owns 70 percent, and the country's largest lender State Bank of India, which owns 30 percent. Features of Jio Payments Bank
- Jio Payment Bank Limited is a 70-30 joint venture between Mukesh Ambani ‟ s Reliance Industries Limited and India's largest lender State Bank of India (SBI).
- Reliance Industries Limited, Mumbai, was one of the 11 applicants which were issued in-principle approval for setting up a payment bank in August 2015 by RBI. However, it received the order to operate in March last year.
- Jio Payment Bank cannot collect deposits exceeding Rs. 1 lakh.
- Jio Payment Bank cannot lend or provide credit cards. It can, however, issue debit cards.
Vijay Shekhar Sharma (Paytm)
Paytm is an Indian e-commerce payment system and digital wallet company. It was founded by Vijay Shekhar Sharma in August 2010 and is based out of Noida SEZ, India. Paytm is available in 10 Indian languages and offers online use-cases like mobile recharges, utility bill payments, travel, movies, and events bookings as well as in-store payments at grocery stores, fruits and vegetable shops, restaurants, parking, tolls, pharmacies and education institutions with the Paytm QR code. As of January 2018, Paytm is valued at $10 billion. Today over 7 million merchants across India use this to accept payments directly into their bank account at 3% fee. The company also uses advertisements and paid promotional content to generate revenues. The company has also launched the "Paytm for Business " app in over 10 regional languages, allowing these merchants to track their payments and day-to-day settlements conveniently. In 2017, the company launched the Paytm Payments Bank with the aim to bring banking and financial services access to half-a-billion un-served and under- served Indians.
The same year, Paytm launched an app for Canadian mobile phone, cable, and Internet, electricity and water bill payments. In 2018, it set up Paytm Money to build investment and wealth management offerings for its users. This business will bring direct mutual funds and money-market funds to the Indian masses.
ANALYSIS AND INTERPRETATION PERSONAL PROFILE OF RESPONDENTS
According to the survey result, the age wise classification of respondents reveals that majority of respondents fall within the range of 18-30 years (60%) , next within 30-50 years (34%) , 6% belong to 50-60 years and no respondents belongs to the age group of above 60 years. Out of 50 respondents 52% are females and 48% are males. According to the survey result, 64% respondents are married and 36% are unmarried. On the basis of survey result, it is found that 50% of respondents belongs to Hindu religion, followed by 30% who are Christians, 14% belongs to SC/ST and the least number of respondents (6%) belongs to Muslim religion. On the basis of level of education of respondents, it is revealed that majority of respondents possess degree, followed by 20% have completed higher secondary education, 14% have post graduation, 10% have completed SSLC, 6% have some other qualification and only 2% have education below SSLC. The survey result are given below;
PERSONAL PROFILE OF RESPONDENTS
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| Source: Primary Data. |
FINDINGS
- The reason for preferring payment bank for most of the respondents is its convenience and least number of respondents prefer payment bank because of its safety and security.
- The mostly preferred by majority of the payment bank customers is payments and remittance service, followed by some customers who use payment bank for small deposit account.
- While comparing the fee charges of payment banks with that of commercial bank majority of the customers of payment banks are satisfied but majority of the commercial bank customers are neutral towards it.
RECOMMENDATIONS
.- Various measures should be taken to increase the level of satisfaction of customers on customer services as well as on the attitude of officials.
- Efforts should be made to increase the safety and security of funds.
- Measures should be taken to maintain the level of satisfaction of customers on interest rate, convenience, savings, and fee charges of payment banks.
- Government should take initiative to increase the level of publicity of payment banks especially through advertisements.
CONCLUSION
Payment banks are becoming the most popular medium of digital transaction. India is going towards a cashless economy. which is more feasible and adaptable in relation to the recent technological and economic trends? Payment banks are providing a gateway to the low income and middle income groups. Innovations and improvisations of business could be the key elements of success of payment banks. it is too early to judge the competency of payment banks. We can hope that payment banks will be playing a pivotal role in achieving the objects of financial inclusion.
BIBLIOGRAPHY
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