The maximum amount a single customer can hold as a deposit in a payment bank account is ₹2 lakh.
Payment banks are a distinct class of banks introduced in India with the primary goal of advancing financial inclusion. They aim to provide basic savings, deposit, and payment services to segments of the population that are underserved by traditional banking systems, including migrant labourers, low-income households, small businesses, and other unorganised sector entities.
Understanding the ₹2 Lakh Deposit Limit
The Reserve Bank of India (RBI) sets the deposit limit for payment banks to ensure they focus on their core mandate of facilitating small-value transactions and remittances. This regulation means that:
- Per Customer Limit: The ₹2 lakh ceiling applies to the total balance held by an individual customer across all their accounts (savings or current) with a single payment bank.
- Regulatory Purpose: This limit prevents payment banks from accumulating large deposits, which could expose them to significant financial risks, especially since they are not permitted to engage in lending activities. It keeps their operations focused on payments and basic savings.
- No Lending: Unlike traditional commercial banks, payment banks cannot offer loans, credit cards, or other credit facilities. Their business model is built around deposits and payment services.
Key Services Offered by Payment Banks
Payment banks offer a range of services designed to simplify banking for their target audience. These typically include:
- Savings and Current Accounts: Customers can open basic deposit accounts.
- Debit Cards: Most payment banks issue debit cards for ATM withdrawals and online/offline purchases.
- Mobile Banking: Extensive mobile applications for account management, payments, and transfers.
- Remittance Services: Facilitating easy and affordable money transfers, especially for domestic remittances.
- Bill Payments: Utility bill payments, recharges, and other transactional services.
- Net Banking: Online portal for banking services.
Payment Banks vs. Commercial Banks: A Comparison
Understanding the differences between payment banks and traditional commercial banks helps clarify the unique role of each in the financial landscape.
| Feature | Payment Bank | Commercial Bank |
|---|---|---|
| Maximum Deposit Limit | ₹2 lakh per customer | No specific upper limit; deposits are insured up to ₹5 lakh by DICGC |
| Loan & Credit Cards | Cannot offer any lending products (loans, credit cards) | Can offer a wide range of loans, credit cards, and other credit facilities |
| Credit Risk | Minimal, as they do not engage in lending | Significant, due to extensive lending activities |
| Forex Services | Typically restricted to domestic remittances; limited foreign exchange activities | Comprehensive foreign exchange services, including international remittances |
| Focus | Financial inclusion, small-value savings, remittances, and payment services | Full-fledged banking services for all segments (retail, corporate, institutional) |
| ATM Network | Often leverage existing agent networks or partner ATMs, may have limited proprietary ATMs | Extensive proprietary ATM networks |
Practical Insights for Customers
For individuals and small businesses, payment banks offer a convenient and accessible way to manage their money, especially for daily transactions and small savings.
- Ideal for Basic Needs: They are perfect for routine transactions, bill payments, and keeping small savings without the complexity of traditional banks.
- Not for Large Savings: If you have savings exceeding ₹2 lakh, you would need to either open accounts with multiple payment banks (each with its own ₹2 lakh limit) or, more practically, choose a commercial bank or other investment avenues.
- Convenience and Reach: Payment banks often have extensive agent networks (e.g., post offices, kirana stores) or entirely digital platforms, making banking accessible even in remote areas.
- Safety of Deposits: Deposits in payment banks are regulated by the RBI, ensuring a level of safety and operational integrity.
In essence, payment banks play a crucial role in bringing banking services closer to everyone, particularly those new to formal financial systems, with a clear and manageable deposit ceiling.
