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Airtel Payments Bank slashes interest rate by 175 bps to 5.5%

RBI's new guidelines for payments bank to get their customers' information verified by third parties, has also come as a blow

Karan Choudhury  |  New Delhi 

Airtel Payments Bank
Airtel Payments Bank

on Monday slashed its interest rate by as much as 175 basis points (bps) to 5.5 per cent per annum, effective Thursday.

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 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 segment,” an spokesperson said.

While Paytm gives a yearly rate of interest of a little over 4 per cent, India Post has kept the rate at 5.5 per cent.

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 and from conducting Aadhaar-based SIM verification of mobile customers using eKYC process, as well as of clients. was allegedly using the Aadhaar e-KYC-based SIM verification process to open accounts of its subscribers without their 'consent'. The UIDAI also took strong objection to allegations that such accounts were being linked to receive a cooking gas subsidy.

Following this, Shashi Arora, chief executive and managing director of Payments Bank, stepped down. “Shashi Arora has been associated with in senior leadership roles since 2006. He has been an asset for and over the years has contributed to the company's growth story,” had said in a statement then.

Also, the Reserve Bank of India’s new guidelines for 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 with customer data verified by its own

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 of However, after the new norms from RBI, a separate process for KYC needs to follow for the payments bank,” sources said.

According to insiders, 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 through a separate process. “The move is going to hit Airtel, which already has been stopped by UIDAI to do for payments bank,” a source close to the company said.

First Published: Tue, February 27 2018. 00:21 IST