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The payments bank, first such to launch in 2017, said the management was trying to keep rates competitive and was keeping it higher than or at par with competition.
“An attractive interest rate of 7.25 per cent was an introductory offer, given that Airtel Payments Bank was leading the roll-out of a completely new segment of banking services in the country. The revised interest rate continues to be the highest in the payments bank segment,” an Airtel Payments Bank spokesperson said.
Insiders, however, said the bank might lose its competitive edge with the move. “This was the USP the bank had over other players. Now, with this slashing, the bank is losing more use cases to competitors who have developed a whole ecosystem that is indirectly connected to its payments banks,” said a senior analyst from an international consultancy.
Last year, the Unique Identification Authority of India (UIDAI) had temporarily barred Bharti Airtel and Airtel Payments Bank from conducting Aadhaar-based SIM verification of mobile customers using eKYC process, as well as e-KYC of payments bank clients. Bharti Airtel was allegedly using the Aadhaar e-KYC-based SIM verification process to open payments bank accounts of its subscribers without their 'consent'. The UIDAI also took strong objection to allegations that such payments bank accounts were being linked to receive a cooking gas subsidy.
Following this, Shashi Arora, chief executive and managing director of Airtel Payments Bank, stepped down. “Shashi Arora has been associated with Airtel in senior leadership roles since 2006. He has been an asset for Airtel and over the years has contributed to the company's growth story,” Airtel had said in a statement then.
Also, the Reserve Bank of India’s new guidelines for payments bank to get their customers’ information verified by third parties, has also come as a blow for players such as Bharti Airtel, which allegedly ran the payments bank with customer data verified by its own telecom business.
According to sources at Airtel, cost of acquisition of customers will go up for the telecom player, already finding it hard to get account holders for its bank. “Earlier, the retailer doing eKYC for mobile connection was also doing KYC for the payments bank of Airtel. However, after the new norms from RBI, a separate process for KYC needs to follow for the payments bank,” sources said.
According to insiders, Airtel is currently evaluating the Reserve Bank of India mandate and it's not clear if the retailer doing KYC for mobile can also do it for payments bank through a separate process. “The move is going to hit Airtel, which already has been stopped by UIDAI to do e-KYC for payments bank,” a source close to the company said.