With an objective to reach out to the unbanked population of rural India, Jio Payments Bank has started its banking services from Tuesday.

Jio Payments Bank is a joint venture between Reliance Industries and State Bank of India (SBI), the country’s largest bank by assets. While Reliance Industries owns 70 per cent, SBI owns 30 per cent in the entity.

In 2015, the Reserve Bank of India gave approval to 11 applicants, including Jio, for starting the payments bank. At present, there are five payment banks in India, including Paytm Payments Bank, Airtel Payments Bank, India Post Payments Bank and FINO Payment Bank. Aditya Birla Idea Payments Bank was the last entrant in the payments bank space.

In a statement on twitter, the Reserve Bank of India stated, “Jio Payments Bank Limited has commenced operations as a payments bank with effect from April 3, 2018.”

Here is the low-down on all you need to know about Payments Banks

  1. The payments bank offers you all kind of banking facilities except one: It doesn’t lend you money.
  2. The procedure for opening a payments bank account is very simple. Being paperless, the whole process is less cumbersome compared with the opening of a bank account. The account in payments bank can be opened through e-KYC.
  3. You cannot deposit beyond a certain limit. According to RBI rules, you can only deposit up to Rs 1 lakh in your account.
  4. You do not need to maintain a minimum balance in payments bank account. This is a relief, considering banks charge a hefty sum if the minimum balance is not maintained in the account. Recently, SBI had to slash its minimum balance charges after facing a severe backlash from the public. Paytm payments bank offers a zero balance account with no minimum balance requirement.
  5. Being in direct competition with banks, payments bank offer you a higher rate of interest. While the rate for Jio Payments Bank has not been announced yet, Airtel Payments Bank, the oldest player in the market, is offering 7.25% to its depositors.
  6. Payments bank have to comply with RBI guidelines when it comes to utilizing your money. They have to deposit 75 per cent of their money in Statutory Liquidity Ratio eligible government securities, and maximum 25 per cent in fixed deposits with other scheduled commercial banks.
  7. There may be charges on withdrawals. For example, Airtel payments bank charges 0.65% of the withdrawal amount.
  8. Most importantly, don’t worry if you already have a wallet with the company. In the course of time, Jio Money will get merged with the Jio Payments Bank.