How payment banks differ from traditional banks: Jio, Airtel and Paytm compared

Reliance-backed Jio Payments Bank, owned by Jio Financial Services, is gearing up to launch a savings account that will automatically sweep idle cash into overnight mutual funds for enhanced returns.

This article explains how payment banks are different from traditional banks, comparing key features of Airtel, Paytm and Jio payment banks.

A payments bank is a special RBI-licensed financial institution in India offering basic banking services like deposits, payments and remittances. These banks can’t issue loans or credit cards, and can accept deposits of up to ₹2 lakh.

Payments banks vs normal banks

Payment banks differ from traditional commercial banks in many ways, such as:

• Payments banks can offer a maximum of ₹2 lakh as the deposit limit, while commercial banks don’t have a cap like this. This limit was previously ₹1 lakh, but the RBI raised it to ₹2 lakh in 2021.

• Commercial banks can issue loans and credit cards, but payments banks are not allowed to do so, as per RBI guidelines.

• Payments banks require a minimum initial capital of ₹100 crore with at least 40% promoter contribution in the first five years. Commercial banks generally need significantly higher paid-up equity.

There are many other differences. Here is a summary table for the same:

Jio vs other payments banks

• Launching its auto-sweep Savings Pro account soon.
• As of June 2025, Jio Payments Bank had over 25 lakh customers and a deposit base of over ₹358 crore.

• Offers 2.5% interest on savings up to ₹1 lakh and 6% on balances between ₹1 lakh and ₹2 lakh.
• Strong reach in rural areas.
• Provides several services, including FASTag, insurance and gold investment options.

• Popular for its wallet integration and UPI features.
• Offers interest between the range of 2.5% and 4%.
• It was barred in 2024 by the RBI from onboarding new customers due to persistent non-compliance and supervisory concerns.
• Offers FASTag, bill payments and other services.

Are payments banks safe?

Technically, yes. Payments banks are safe as they’re covered by RBI’s DICGC insurance of up to ₹5 lakh per depositor, like in commercial banks. The Deposit Insurance and Credit Guarantee Corporation (DICGC) provides deposit insurance to bank depositors. It insures all bank deposits, including savings, fixed, current and recurring deposits up to a maximum of ₹5 lakh per depositor, per bank.

As the deposit limit for these banks is ₹2 lakh, all deposits are covered under insurance.

Key services offered by payments banks

Payments banks offer various services like:

• UPI, NEFT, IMPS transactions
• Debit card, with annual charges depending on the issuer
• Bill payments, recharges
• Third-party financial products like insurance, mutual funds and gold

With Savings Pro, Jio Payments Bank is trying to make payments banks more attractive for customers by offering enhanced returns through overnight mutual funds.

Remember that these banks often charge for these services, and the fee for each service differs from bank to bank. Further, banks may also have different daily transaction limits. Before opening an account with any payments bank, ensure you read the fine print carefully.