In India, payments banks like Airtel Payments Bank and Jio Payments Bank have become popular alternatives to traditional banks. But before diving into a comparison of these two, it’s important to understand what makes payments banks different from regular banks. Payments banks provide essential banking services but with certain restrictions. Let’s break down these differences and discuss the pros and cons of Airtel Payments Bank and Jio Payments Bank, helping you make an informed decision.
Payments Banks vs. Traditional Banks
A payments bank operates like a mini bank with limited services, catering primarily to those who need basic banking features. Here are the main differences:
- No Credit Cards: Payments banks offer debit cards, but not credit cards. If you need a credit card, you’ll have to go to a regular bank, as payments banks are not authorized to issue credit cards on their own.
- No Fixed or Recurring Deposits: Payments banks cannot offer fixed deposits (FDs) or recurring deposits (RDs). Traditional banks allow you to save and grow your money in these types of deposits, making them a better option if you’re looking to invest.
- No Loans: Payments banks cannot provide loans, whether personal, home, or car loans. So if you need a loan, a traditional bank will be your best bet.
- Lower Savings Cap: Payments banks have a savings cap of Rs 2 lakh, as regulated by the RBI. This cap was recently increased from Rs 1 lakh to Rs 2 lakh, but still, it is limited compared to the higher limits in traditional banks.
- Quick Account Setup: Setting up an account with a payments bank is quick and mostly paperless, with many processes completed within a few hours. This makes them ideal for those new to banking or looking for a simpler setup.
With these differences in mind, payments banks are best for people starting out with banking, offering a quick and basic account. For those with higher financial needs, a traditional bank might still be essential. Now, let’s take a closer look at the offerings of Airtel Payments Bank and Jio Payments Bank.
Airtel Payments Bank
Airtel Payments Bank provides basic banking services and can be accessed through Airtel’s mobile app. Here are its key features and charges:
- Interest Rate: Airtel Payments Bank offers up to 7% interest for balances between Rs 1 lakh and Rs 2 lakh. Balances under Rs 1 lakh earn only 2%, which results in an effective rate of around 3.43% if your balance is about Rs 1.4 lakh.
- Charges: While Airtel Payments Bank is a zero-balance account, there are various charges:
- Account Facilitation: Rs 1 plus GST per year for non-salary or non-disbursement accounts.
- Cash Loading: Loading cash up to Rs 25,000 is free, but beyond that, a fee of 0.5% is charged up to Rs 50,000 and 0.75% above Rs 50,000.
- Cash Withdrawals: ATM withdrawals are free up to Rs 10,000, but beyond this, a fee of 0.65% plus GST is applied.
- Inactivity Fees: If the account remains inactive, a maintenance fee of Rs 20 plus GST may be charged monthly, with further charges if inactivity continues.
These fees make Airtel Payments Bank suitable for basic transactions, but the various charges can add up if you use their services frequently. The bank also offers a virtual and physical debit card, which incurs an annual fee.
Jio Payments Bank
Jio Payments Bank offers a simpler fee structure and fewer charges on basic services. Here’s what it has to offer:
- Interest Rate: Jio Payments Bank also provides interest on savings, although exact rates may vary and often align with market standards.
- Charges: Jio Payments Bank has a very straightforward structure with fewer charges:
- Basic Services: No fees for SMS alerts, monthly statements, or debit card transactions.
- Adhoc Statements: Digital statements are free, but a physical copy will cost Rs 775 plus GST.
However, keep in mind that Jio Payments Bank may have additional restrictions for accounts with limited KYC, meaning that if you have a basic KYC, you may encounter lower transaction limits.
Which Payments Bank Should You Choose?
If your main goal is to have a basic bank account for simple transactions, both Airtel Payments Bank and Jio Payments Bank can meet your needs. Here’s a quick comparison:
- For Higher Balances: Airtel Payments Bank offers higher interest for balances between Rs 1 lakh and Rs 2 lakh, which could make it attractive if you keep a balance within this range.
- For Low Fees: Jio Payments Bank has a more transparent and simple fee structure, making it more cost-effective if you are looking to avoid extra fees for services.
- Convenience: Airtel Payments Bank has many banking points, making it accessible in most areas. However, Jio Payments Bank’s simplicity in charges and fewer fees could be beneficial if you prioritize cost over accessibility.
Final Thoughts
A payments bank can be a good choice for starting your banking journey with simple requirements. However, if you’re looking for more services like loans or FDs, a traditional bank might be better suited. Both Airtel Payments Bank and Jio Payments Bank provide great options, so consider your needs and usage patterns before deciding.