What Is Payment Bank: Services, Limitations & RBI Guidelines

Key Takeaways

• A payment bank provides you with common banking services. You can use payment banks to deposit money up to ₹2,00,000, make digital transfers of funds, pay utility bills, and use mobile banking.
   
• Payment bank has some unique features like, easily accessible on your mobile, providing interest on balance, easy paperless account opening, and reaching rural and semi-urban areas.
   
• Some popular payment banks are Paytm Payments Bank, Airtel Payments Bank, Fino Payments Bank, and India Post Payments Bank.
   

A payment bank is a type of financial institution that offers basic banking services like savings accounts, fund transfers, bill payments, and mobile banking.

However, it cannot lend money or issue credit cards. These banks mainly focus on small transactions and digital services.

Satish is a vegetable vendor. He earns ₹1,000 to ₹1,500 daily. He deposits ₹27,000 each month into his payment bank account. Over four months, his balance reaches ₹1,08,000. Since the account allows deposits up to ₹2,00,000, he operates comfortably within the limit.

He comfortably uses the same account to receive UPI payments, send money to suppliers, and pay his mobile bills. However, when he needed a loan of ₹25,000 to buy a new pushcart, the payment bank was unable to help, as it does not offer credit.

This blog will provide a detailed overview of the payment bank, including its key services, features, limitations, and relevant RBI guidelines.

Key Services Offered By Payment Banks

Payment banks provide simple and essential banking services. These include the following:
 

The above-mentioned basic services make payment banks useful for daily transactions without the need for branch visits.

Read More – Fino Net Banking Services – Safe, Fast, and Easy Online Banking

Unique Features Of Payment Banks

Payment banks operate differently from regular banks. The main features of the payment bank include the following:
 

The above-mentioned features make payment banks inclusive, accessible, and easy to use for all sections of society.

Limitations Of Payment Banks

Despite their benefits, payment banks have certain limitations. The table below shows the limitations of the payment bank:
 

Payment banks are convenient for transactions. However, they might not fully meet the needs of savers and credit seekers.

RBI Guidelines For Payment Banks

The Reserve Bank of India has laid down clear rules to ensure the safety and proper functioning of payment banks. The following table highlights the major guidelines:
 

The above-mentioned guidelines ensure that payment banks operate securely and maintain customer trust.

Popular Payment Banks In Operation

Several payment banks are active today. The following table lists the most popular payment banks:
 

These banks help bridge the gap between basic financial access and digital convenience.

Also Read - Post Office Net Banking – Manage Your Postal Savings Online Effortlessly

Difference Between Payment Banks And Traditional Banks

Payment banks and traditional banks work under the same RBI regulations but serve customers differently. 

Payment banks are designed to provide basic banking facilities, mainly for individuals in rural and semi-urban areas. They focus on deposits, fund transfers, and payments but cannot extend credit.

On the other hand, traditional banks provide a complete range of financial services, including loans, investments, and higher deposit flexibility. The following table highlights the key differences of a traditional bank and payment bank:
 

The above-mentioned table makes it clear that payment banks are best for simple and secure transactions, while traditional banks meet broader financial needs.

Bonus Tip: Did you know that payment banks have urged the Union Finance Ministry to increase the deposit limit from ₹2,00,000 to ₹5,00,000. If this request gets approved, then payment banks will be able to serve customers with higher balances.

Conclusion

Payment banks have changed how people access banking, especially in remote and underbanked areas.

With easy account opening, digital services, and no loan risks, they offer you a secure way to manage everyday money needs.

However, you must know that they do come with limits like the ₹2,00,000 deposit cap and no credit facilities. 

Still, if you are looking for basic banking needs like savings, fund transfers, and bill payments, they are a reliable option.

FAQs

1. What is SLR full form?

The full form of SLR is Statutory Liquidity Ratio. It is the minimum share of a bank’s deposits kept in cash, gold, or approved government securities.

2. Can I open more than one payment bank account?

Yes, you can have multiple accounts across different payment banks.

3. What is the current CRR?

As reported by the RBI in August 2025, the current Cash Reserve Ratio (CRR) in India is 4.00%.

4. Is there a charge for opening a payment bank account?

Account opening is usually free with no hidden charges.

Apply for Loans Fast and Hassle-Free

Apply Now

About the Author

LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?