Paytm Payments Bank opens; offers 4% on savings deposits

Paytm Payments Bank Ltd today launched banking operations under its payments bank licence, joining the ranks of Airtel Payments Bank Ltd and India Post Payments Bank Ltd.

With the launch of Paytm Payments Bank, the number of payments banks in operation has gone up to three.

Payments bank is different from other banks in that it allows customers to open a savings account for a deposit amount of up to Rs1lakh.

Paytm Payments Bank is currently offering the service only by invitation. It is offering 4 per cent interest on savings account, against 7.25 per cent offered by Airtel Payments Bank on savings account deposits and 4.5-5.5 per cent that India Post Payments Bank is providing.

Paytm Payments Bank's interest rate is in line with all the large commercial banks, including State Bank of India, Bank of Baroda and ICICI Bank Ltd, which continue to offer 4 per cent interest rate on savings account deposits.

Some of the smaller banks, including Yes Bank Ltd and RBL Bank Ltd, offer 5.5-7.1 per cent interest rate on savings accounts, depending on the deposit amount.

India Post Payments Bank is offering three kinds of accounts, including one regular and two basic savings bank deposit accounts. For most payments banks, there is a cash withdrawal charge.

Paytm Payments Bank's cash withdrawal charges using the ATM is similar to any other major bank of the country. You will get five free transactions in non-metro cities and three free transactions in a metro city, after which you will be charged Rs20 for each cash withdrawal and Rs5 for non-financial transactions like taking out a mini statement. In case you need a physical statement from the bank, you will have to pay Rs50 plus delivery charges; additional service tax will also be applicable.

Airtel Payments Bank will charge 0.65 per cent of the withdrawal amount if you withdraw cash from a banking point.

India Post Payments Bank does not charge any fee on withdrawal of money using an ATM card at India Post Payments Bank ATM or Punjab National Bank ATM. However, for withdrawals from other bank ATMs, it charges at rates prescribed by Reserve Bank of India (RBI) - five free transactions in non-metro cities and three free transactions in metro cities, after which Rs20 will be charged for financial transactions and Rs8 for non-financial transactions.

For doorstep banking, where the bank delivers cash at the customer's doorstep, cash deposit and withdrawal charges range between Rs15 and Rs35, depending on the amount.

Paytm Payments Bank will provide Rupay debit card to its customers at an annual subscription cost of Rs100 plus delivery charges. In case of loss of card, the bank will charge Rs100 plus delivery charges for a replacement. Cheque book will cost Rs100 plus delivery charges for 10 cheque leaves.

India Post Payments Bank is offering free debit cards, but you will be charged Rs100 if you take add-on cards or a new card in case of theft or loss of card. Also, it charges an annual maintenance fee of Rs100, which is applicable from the second year onwards. There are also limitations in terms of withdrawal from the ATM for India Post Payments Bank-a maximum amount of Rs10,000 per transaction and a maximum amount of Rs25,000 per day-depending on the account you hold with the bank. In case the ATM kit or ATM card is returned due to wrong address, you will have to pay Rs100 as charges for the replace card to be delivered.

Paytm Payments Bank will provide online fund transfer services such as Immediate Payment Service (IMPS), Unified Payment Interface (UPI) and National Electronic Fund Transfer (NEFT) free of cost.

India Post Payments Bank will charge a fee if the transaction happens at the branch or as part of doorstep banking - NEFT will cost Rs2.5-5, while IMPS transaction will cost Rs5. If you do it using mobile banking, NEFT is free, but you have to pay Rs4 per transaction for IMPS.