This document discusses payment banks in India and potential impacts on traditional banks. It provides background on the number of bank branches and ATMs in India, with most located in urban areas. Ten companies that received licenses to operate payment banks in India are listed. Payment banks can accept deposits up to Rs. 1 lakh but cannot provide loans. Key ways payment banks may impact traditional banks include competing for customers in rural areas through the Department of Post's large rural presence, and appealing to customers through digital platforms and convenient, low-cost services. The document also discusses advantages payment banks have over nationalized banks and areas traditional banks should focus on to address challenges from payment banks, such as technology investments and partnerships.

1. NITIE Mumbai
Team: Abhimanyu
Saurabh Katiyar
PGDIE 45B
Saurabh.Katiyar.nitie2017@gmail.com
+91 7045813717
Sagar Das
PGDIE 45B
Sagar.Das.nitie2017@gmail.com
+91 7045372251

2. Banking sector overview
• Number of Bank branches in India :: 1,15,082
• Number of ATMs in India :: 1,60,055
Rural
15%
Urban
85%
DISTRIBUTION OF ATMS IN INDIA
Rural
38%
Urban
62%
DISTRIBUTION OF BANKS IN
INDIA

3. Payment Banks
The Payment banks licensed by RBI :
1. Aditya Birla Nuvo
2. Airtel M Commerce Service
3. Cholamandalam Distribution Service
4. Department of Post
5. FINO PayTech
6. National Securities Depositor
7. Reliance Industries
8. Dilip Shanghvi, (founder of Sun Pharmaceuticals)
9. Vijay Shekhar Sharma, (CEO of Paytm)
10.Tech Mahindra
11.Vodafone M-Pesa
Payment Bank can only receive deposits and provide remittances. It cannot carry
out lending activities. Payment Banks can issue ATM/debit cards, but can not issue
credit cards as they are not empowered to carry out lending activities.

4. Identify major areas where payment banks are going
to impact traditional banking business
1. India Post’s reach, with 139,000 post offices, significantly exceeds the
number of bank branches at around 44,700 in rural areas. Since
payment banks are allowed to take deposits up to Rs.1 lakh, public
sector banks could lose out on customers who might open savings
accounts with the post office.
2. Small and medium public sector banks will be impacted as incremental
deposit growth and market share will see some impact from payment
banks, especially in the rural and semi-urban areas.
3. Payment banks are backed by digital platforms, adequate capital, zero
legacy issues, and low-cost innovative and convenient services.
4. Payment banks will bridge the last mile (or last 10-20 miles) between
bank branches and the remote customer living in a rural hamlet
5. You could have a system using QR codes to help people select what
they want and make the payment without lining up in a queue, which is
something the retailers also want. Or we could give an auto guy a
printed QR code to keep in his rickshaw, and when it's time to pay, you
scan the code, enter the amount, and his account gets a credit instantly

5. What are the key advantages payment banks enjoy
over nationalized banks
• These banks are likely to help expand banking services to the remotest corner of the
country. All that is needed is a smart phone with internet connection, some unique
identification number (such as Aadhaar); and a linked bank account.
• Indian Postal Service had 154,866 post offices, of which 139,040 (89.78 percent) were
in rural areas and 15,826 (10.22 percent) in urban areas.
• In Mumbai, daily wage labourers and migrant workers use the FINO Paytech’s facilities
primarily for remitting money to their families in far flung regions of the country such as
Uttar Pradesh, Bihar and West Bengal. Payment technologies have proved hugely
popular in other developing countries. In Kenya, the most cited success story,
Vodafone’s M-Pesa is used by two in three of adults to store money, make purchases
and transfer funds to friends and relatives.
• Airtel, Vodafone and Idea, which are mobile service providers, already have a customer
base of over 580 million potential customers. PayTM already has 25 million e-wallet
customers, who are all potential targets for its payment bank.

6. What should be key focus areas of bank X to face
challenges posed by the payment banks
• Bank X should make strong investments in technology contactless
payment enabled through usage of near field communication (NFC)
technology
• Bank X can tie up with some of the companies that have got approval
for setting up payment banks like State Bank of India (SBI) and Kotak
Mahindra Bank (KMB) have already teamed up with licensees—the
former with Reliance Industries and the latter with Bharti Airtel—to
make sure they get a share of the action.
• E-commerce players have been leveraging the payment facility of
banks so Bank X should collaborate with e-commerce firms to provide
wallet services to ensure faster transactions.
• Bank X should invest on smartphone apps to make them more easy
to use and advertise these apps.

7. What channels bank X should tap for customer
retention and new customer acquisition
• Improvement in Employee Productivity
• Corporate Social Responsibility
• Scouting applications from customers via banking correspondents for people residing in
remote unbanked areas and bringing them into the banking fold.
• Speeding the Loan sanction process
• Improving the present internet banking experience
• Continuous modernization of services with the help of customer feedback
• Loyalty scheme programs and customized services for customers

8. Thank You !!