Airtel Payments Bank Ltd, a subsidiary of telecom major Airtel, Wednesday launched its commercial operations with an offer to give a hefty 7.25 percent interest rate on savings account deposits.
With rolling out a pilot of its banking services in Rajasthan, it became the first payments bank to go live. In a regulatory filing to Bombay Stock Exchange, the bank said over 10,000 retail outlets across the state would function as banking points for the new payment bank.
To attract cheap deposits, the bank will give a hefty 7.25 percent to customers, making it one of the highest savings bank rate in the Indian banking system.
Most public and private sector banks are offering 4 percent interest rate on deposits with a few private sector banks providing 6 percent on the same. Interestingly, interest rates on fixed deposits have also fallen near the range of 7 percent in recent months.
The new payment bank plans to expand its merchant network in Rajasthan to 1,00,000 by December this year, it said.
Commenting on the launch, Managing Director and Chief Executive Officer of Airtel Payments Bank, Shashi Arora said, "With this pilot, we have taken a big step towards the launch of our banking services and will be testing our operational readiness for full-scale launch across India."
In a bid to improve banking penetration in the country, Reserve Bank of India has issued licences to private firms for setting up payment banks. On August last year, the central bank issued licences to 11 entities including Airtel, FINO, Department of Post, Reliance Industries to set up payment banks.
Payment banks will only accept deposits with no provision of giving out loans to clients. While it can open both savings and current accounts, credit card issuances are not allowed.