How Are Payment Banks Different from Traditional Banks: All You Need to Know

The Department of Post is conducting an exam to recruit for its recently incorporated division, ‘India Post Payments Bank (IPPB)’.

The IPPB exam is being conducted for the first time and thus, there is a lot of information gap. We at Oliveboard are trying to bridge that gap by providing you with all the relevant information so that you can make informed decisions.

In this post we have tried to answer all questions related to payment banks and what your responsibilities as a part of IPPB would be like.

This article will not only provide you with all the required information about ‘payment banks’ but will also come in handy at the time of interview preparation.

What are Payment Banks?
  • New category of banks conceptualised by RBI following the recommendations of the Nachiket Mor Committee.
  • This ‘Payment Bank License’ will enable the network of Indian Post to offer banking services (limited) to the masses. India has the highest number of post offices in the World and if post offices can become payment banks, financial inclusion is quite easy (IPPB).
  • Payment banks have been introduced to increase financial inclusion in India.
  • These will cater largely to migrant labour workforce, low income households, small businesses and other unorganised sector entities by introducing simple policies especially designed for them.
  • Payment banks are all about innovation. They will use technology to provide optimum and highly efficient banking services.
The following table compares the roles of payment banks and traditional banks.

Role / Responsibility

Payment Banks

Traditional Banks


Deposits upto ₹1,00,000 / Customer

No limit on deposits


  • Current and Savings Accounts
  • No restriction on income level to open an account
  • No need to maintain a certain balance amount
  • All kinds of accounts
  • Certain income level is required to open an account
  • Certain balance amount should be maintained



Loans are one of the key features of traditional banks.

Credit/ Debit Cards
  • Debit / ATM cards will be issued
  • No Credit
  • All types of cards are issued




Bill Payment

Online utility bill payment facility would be provided.

Online utility bill payment facility is provided.

Money Remittances

NEFT, RTGS, IMPS available.

Cost of transfer is higher.

Issue of Financial Products

Only risk-free simple financial products like insurance etc. would be issued.

All sorts of financial products are available.

Also, the payment banks are required to have a highly efficient customer care unit.

How will these Payment Banks benefit the country?
  • Will help in fighting the problem of forged currency as almost all of the transactions would be digital.
  • As less money would be in circulation, and most of the transactions will be online, the government can keep tabs on black money.
  • Payment banks will ensure more money comes into the banking system and will help reach out to people in rural areas. And thus help in achieving higher financial inclusion rates.
  • Payment banks will offer zero balance savings bank accounts and banking services at very low costs.
Which organisations (apart from India’s Department of Posts) have been granted permission to set-up Payment Banks?
  • Reliance Industries (70% RIL, 30% SBI)
  • Vodafone M-Pesa
  • Airtel M-commerce
  • Vijay Sekhar Sharma (PayTM)
  • Aditya Birla Nuvo (Idea Cellular)
  • Tech Mahindra
  • Dilip Shanghvi (Sun Pharma)
  • Cholamandalam Distribution Services
  • Fino Paytech
  • Department of Posts (India Post)
  • National Securities Depository Limited (NSDL

Most of these organisations will use their existing customer networks to reach out to the ‘last-mile’ people.

Payments banks will enable poorer citizens who transact only in cash to take their first step into formal banking. It could be uneconomical for traditional banks to open branches in every village but the mobile phones coverage is a promising low-cost platform for quickly taking basic banking services to every rural citizen.

As a part of the IPPB you will be involved in this process, which is the first step towards redefining Banking in India.

All The Best!