In the recent times, country has witnessed number of scams which include Nirav Modi’s PnB scam. Now that he flew abroad escaping the cases filed against him, nation needs security in every regard. Money wallets are the need of the hour to everyone. Transactions are handled through wallets like PayTM, PhonePe etc. Some of these wallet companies have recently started their own payment banks in compliance with the RBI.

Physical banks are now taken over by digital banks such as PayTM payments bank handled by One97 communications Ltd. and Airtel payments bank handled by one of the leading mobile operator Airtel. Also, some other physical banks like Kotak Mahindra are shifting to digital accounts, which reduces the storage space and also the need for physical money. With the encouragement from the government for digital money, PayTM and Airtel are making a move by turning into payment banks. As part of Digital India initiative, government has mandated linking of aadhaar cards with all e-wallets in order to make sure the flow of money is tracked. Payments bank act as a bridge between the e-wallets and the banks, which is considered as the future of banking system, according to a report from Gartner.

Though government is encouraging the growth of payments banks and digital banks, but there are instances which prove the government is not ready to accept the change right now. In a recent event, Airtel had to pay a total sum of Rs.190 crore LPG subsidy that had flown into the unsolicited payments bank accounts of 31 lakh airtel subscribers. Airtel promised NPCI (National Payments Corporation of India) that it will pay back 190 crores, including the interest to the customers’ original bank accounts that were linked to the Direct Benefit Transfer.

The government acted swiftly in the matter and the Unique Identification Authority of India, late last week, temporarily barred the company from conducting Aadhaar-based SIM verification of mobile customers using eKYC process and e-KYC of payments bank clients. Suspending the ‘e-KYC licence key’, the Aadhaar issuing body UIDAI also ordered PricewaterhouseCoopers to conduct an audit of Bharti Airtel and Airtel Payments Bank to ascertain if their systems and processes are in compliance with the Aadhaar Act.

Payments banks and virtual banks are very new in India, which need some time to sink into the revenue system of India. In Andhra Pradesh, starting from pensions of senior citizens to registration of newly purchased vehicles, aadhaar cards are being used as a major proof of address and identity. Due to the existence of a number of street vendors and preference of customers to make purchases offline than online, it might take some time for the payments banks to settle down in the state. But, are the payments banks a necessity in the current situation? How secured are the details of the customers that have accounts in these payment banks? Amidst many bank scams, such as PNB scam in February 2018 where physical banks stand at zero security, can the payments bank provide efficient security to digital accounts without loss of information?


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