After Airtel and Idea, Jio becomes the third cellular operator to launch payments banks. The Reserve Bank of India, the apex banking body has mentioned that Jio Payments Bank has begun its banking service from today.
“Jio Payments Bank Limited has commenced operations as a payments bank with effect from April 3, 2018,” RBI said in a notification.
Jio Payments Bank is a 70:30 joint venture between RIL and India’s largest lender State Bank of India.
The entry of Jio Payments Banks will add more competition for Vijay Shekhar Sharma promoted Paytm Payments Bank, Airtel, Fino, and Aditya Birla Idea Payments Bank. Fino launched payments bank in July 2017 while Idea kicked-off payments banking facility in February this year.
The Mukesh Ambani-led Reliance Industries Limited (RIL) was one of the 15 applicants which got approval for setting up a payments bank in 2015.
Besides the aforementioned players, India Post Payments Bank (IPPB) is also queued up to commence its operations soon. IPPB is planning to open 3,250 customer access points (a kind of mini branches) across 650 districts.
How will Jio Payments Bank impact incumbents?
RIL has been one of the most aggressive business groups when it comes to bet on emerging businesses. After intimidating incumbent telecom players through a cheap 4G network, it had acquired music streaming platform Saavn and also invested in ALTBalaji to beef up its stake in the web exclusive original content.
The debut of Jio Payments Bank will make things more difficult for incumbents including Airtel and Paytm. While Airtel Payments Bank has been facing temporarily ban to conduct Aadhaar-based KYC process for alleged abuse of regulations, Paytm is experiencing heat from several business verticals.
The quick adoption of UPI-based payment option has been cannibalising digital wallet business in a big way. Besides, mandatory KYC for wallet companies has added more woes to wallets such as Paytm and MobiKwik.
While details of Jio Payments Bank such as interest on deposit is yet to be ascertained, it’s likely to play a similar game akin to Jio in banking vertical. Currently, Paytm gives 4 per cent interest on savings accounts. Airtel used to give 7.25 per cent interest, however, it had slashed the interest rate by 1.75 per cent in February this year.
RIL has been playing deft strokes through Jio ecosystem as far platform play is concerned. Going forward, it would be interesting to see how Jio Payments Bank takes on the competition.
The news was first reported by Mint via PTI.