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Payment Banks are different from other Commerical Banks in the following ways :
1. These banks only accept deposits.
2. Only provide payments and remittances services.
3. Only distribute third party financial products.
4. Accept deposit, provide payments and remittances services, distribute third party financial products but are not allowed to lend or issue cards.

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Correct Answer - Option 4 : Accept deposit, provide payments and remittances services, distribute third party financial products but are not allowed to lend or issue cards.

The correct answer is Accept deposit, provide payments and remittances services, distribute third party financial products but are not allowed to lend or issue cards.

  • Payment banks operate slightly different from Commercial banks
    • Deposit amount: You can deposit up to Rs 1 lakh in a payments bank.
      Whereas there is no such limit in a commercial bank.
    • Credit cards and loans: Payments banks are allowed to give debit cards to their customers but do not provide credit cards or loans. They can only do so if they have tied up with a commercial bank.
      Commercial banks do provide loans and credit cards.
    • Minimum balance: Many commercial banks require you to have a minimum balance in your account. Failure to do so may result in a penalty.
      In a payments bank’s case, there is no minimum balance. Customers can open an account without paying any money upfront. These accounts are known as zero-balance accounts.
    • NRI: Commercial banks can accept NRI deposits, whereas payment banks cannot.

  • Airtel Payments Bank, India Post Payments Bank, etc are the example of Payment Bank.
  • The objectives of setting up a payments bank are to further financial inclusion by providing small savings accounts and payments/remittance services to the migrant labor workforce, low-income households, small businesses, other unorganized sector entities, and other users.

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