Payments banks were supposed to be the next big thing in Indian banking – but they’re fizzling out

Three years after the RBI granted in-principle licences to some entities, the sector is struggling to come into its own.

They were supposed to usher in the next great disruption in Indian banking.

However, three years after the Reserve Bank of India granted in-principle payments bank licences to a bunch of entities, the sector is struggling to come into its own. While a few of those who got the central bank’s nod have completely dropped out, the remaining haven’t gone much far either.

Payments banks are organisations that accept deposits of up to Rs 1 lakh ($1,456) each but are not allowed to lend.

The reasons for their limited impact till now vary from a recent ban on accepting new customers and the imposition of certain penalties to sluggish deposit collection and delayed launches. While profitability pressures were always expected, stringent know-your-customer norms and a competitive banking ecosystem, too, have derailed growth, experts say.

The birth

In August 2015, the banking regulator cleared 11 organisations for setting up payments banks. The idea was to introduce more un-banked or under-banked Indians to formal channels.

In the following months, though, Tech Mahindra, Cholamandalam Finance, and the Dilip Shanghvi-IDFC Bank-Telenor joint venture, dropped out. Both Vodafone and Idea had secured approvals, but following their merger, it is likely that Vodafone may surrender the licence.

Paytm, Fino, Idea, and Airtel went ahead and launched operations. India Post, the government postal service, is set to kickstart its business later this month. Reliance Jio did a limited launch for its employees this April. National Securities Depository Limited, country’s oldest and largest depository, the last in the race, is expected to join the fray later this year.

The problem

Last year, Airtel Payments Bank was forbidden from adding new customers for a few months after it was revealed that it had violated certain norms by opening accounts without customers’ consent.

Now, Paytm and Fino Payments banks are also in a similar soup.

Recently, the central bank declared that the KYC done by these firms before launching their respective banks won’t be valid. This has increased operational costs. “Customer acquisition has become even more difficult now. Earlier it was easy to get customers on-board as the KYC level was really basic. But now things have changed,” said a former executive at a payments bank, requesting anonymity.

The competition has turned even more fierce, and not just from rivals.

The Narendra Modi government launched the Pradhan Mantri Jan-Dhan Yojana in 2014, a financial inclusion scheme aimed at providing bank accounts to all Indians. Since its launch, over 322 million accounts have been opened under the scheme, covering 99.7% of Indian households, government estimates show. So a large section of the unbanked population is already covered by now, narrowing payments banks’ scope.

Meanwhile, the evolving digital payments ecosystem has also thrown a spanner in their works.

The digital non-starter

Earlier, payments bank customers were expected to start off with basic digital transactions with payments banks, and graduate to more complex banking, including loans and investments, in the long run. Digital transactions were also expected to reduce their costs.

However, with the coming of the government’s Unified Payments Interface and the entry of several other payment firms, the digital edge has been lost. Even existing banks have upped the ante online. And all of them are vying for the same customer pie.

“The whole premise of differentiated banking can be questioned now,” believes Ashvin Parekh who runs an advisory services firm and had also helped select payment bank to chalk up their plans. “A lot has changed since the time these banks were first envisioned in 2013-2014.”

Certain things that were taken for granted during the planning stage have not come true, added Parekh. For instance, it was assumed that telecom players will have a ready user base which they can turn into their bank customer base. That hasn’t worked out so far.

One of the most important concerns is that these banks are not allowed to lend and, therefore, the revenue stream is limited, raising serious doubts over the model’s viability. Also, they are allowed to invest only in government securities which offer lesser returns compared to other avenues such as mutual funds.

“The offering is very niche and doesn’t cover the whole gambit of banking services. Therefore, even after a customer has opened an account at a payments banks, they may need to go to another full-service bank to meet some of their banking needs,” Kalpesh Mehta, partner at auditing firm Deloitte Haskins & Sells, explained. “Therefore, the appeal is limited.”

The next leg of growth for payments banks may now come only by acquiring merchants, explain analysts. But this will require significant investments. Since profitability remains elusive, many may not be keen to pump in more funds at this point.

The jury is still out on whether the business is losing out. But clearly, it won’t be an easy ride.

This article first appeared on Quartz.

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Swara Bhasker: Sharp objects has to be on the radar of every woman who is tired of being “nice”

The actress weighs in on what she loves about the show.

This article has been written by award-winning actor Swara Bhasker.

All women growing up in India, South Asia, or anywhere in the world frankly; will remember in some form or the other that gentle girlhood admonishing, “Nice girls don’t do that.” I kept recalling that gently reasoned reproach as I watched Sharp Objects (you can catch it on Hotstar Premium). Adapted from the author of Gone Girl, Gillian Flynn’s debut novel Sharp Objects has been directed by Jean-Marc Vallée, who has my heart since he gave us Big Little Lies. It stars the multiple-Oscar nominee Amy Adams, who delivers a searing performance as Camille Preaker; and Patricia Clarkson, who is magnetic as the dominating and dark Adora Crellin. As an actress myself, it felt great to watch a show driven by its female performers.

The series is woven around a troubled, alcohol-dependent, self-harming, female journalist Camille (single and in her thirties incidentally) who returns to the small town of her birth and childhood, Wind Gap, Missouri, to report on two similarly gruesome murders of teenage girls. While the series is a murder mystery, it equally delves into the psychology, not just of the principal characters, but also of the town, and thus a culture as a whole.

There is a lot that impresses in Sharp Objects — the manner in which the storytelling gently unwraps a plot that is dark, disturbing and shocking, the stellar and crafty control that Jean-Marc Vallée exercises on his narrative, the cinematography that is fluid and still manages to suggest that something sinister lurks within Wind Gap, the editing which keeps this narrative languid yet sharp and consistently evokes a haunting sensation.

Sharp Objects is also liberating (apart from its positive performance on Bechdel parameters) as content — for female actors and for audiences in giving us female centric and female driven shows that do not bear the burden of providing either role-models or even uplifting messages. 

Instead, it presents a world where women are dangerous and dysfunctional but very real — a world where women are neither pure victims, nor pure aggressors. A world where they occupy the grey areas, complex and contradictory as agents in a power play, in which they control some reigns too.

But to me personally, and perhaps to many young women viewers across the world, what makes Sharp Objects particularly impactful, perhaps almost poignant, is the manner in which it unravels the whole idea, the culture, the entire psychology of that childhood admonishment “Nice girls don’t do that.” Sharp Objects explores the sinister and dark possibilities of what the corollary of that thinking could be.

“Nice girls don’t do that.”

“Who does?”

“Bad girls.”

“So I’m a bad girl.”

“You shouldn’t be a bad girl.”

“Why not?”

“Bad girls get in trouble.”

“What trouble? What happens to bad girls?”

“Bad things.”

“What bad things?”

“Very bad things.”

“How bad?”


“Like what?”


A point the show makes early on is that both the victims of the introductory brutal murders were not your typically nice girly-girls. Camille, the traumatised protagonist carrying a burden from her past was herself not a nice girl. Amma, her deceptive half-sister manipulates the nice girl act to defy her controlling mother. But perhaps the most incisive critique on the whole ‘Be a nice girl’ culture, in fact the whole ‘nice’ culture — nice folks, nice manners, nice homes, nice towns — comes in the form of Adora’s character and the manner in which beneath the whole veneer of nice, a whole town is complicit in damning secrets and not-so-nice acts. At one point early on in the show, Adora tells her firstborn Camille, with whom she has a strained relationship (to put it mildly), “I just want things to be nice with us but maybe I don’t know how..” Interestingly it is this very notion of ‘nice’ that becomes the most oppressive and deceptive experience of young Camille, and later Amma’s growing years.

This ‘Culture of Nice’ is in fact the pervasive ‘Culture of Silence’ that women all over the world, particularly in India, are all too familiar with. 

It takes different forms, but always towards the same goal — to silence the not-so-nice details of what the experiences; sometimes intimate experiences of women might be. This Culture of Silence is propagated from the child’s earliest experience of being parented by society in general. Amongst the values that girls receive in our early years — apart from those of being obedient, dutiful, respectful, homely — we also receive the twin headed Chimera in the form of shame and guilt.

“Have some shame!”

“Oh for shame!”




“Do not bring shame upon…”

Different phrases in different languages, but always with the same implication. Shameful things happen to girls who are not nice and that brings ‘shame’ on the family or everyone associated with the girl. And nice folks do not talk about these things. Nice folks go on as if nothing has happened.

It is this culture of silence that women across the world today, are calling out in many different ways. Whether it is the #MeToo movement or a show like Sharp Objects; or on a lighter and happier note, even a film like Veere Di Wedding punctures this culture of silence, quite simply by refusing to be silenced and saying the not-nice things, or depicting the so called ‘unspeakable’ things that could happen to girls. By talking about the unspeakable, you rob it of the power to shame you; you disallow the ‘Culture of Nice’ to erase your experience. You stand up for yourself and you build your own identity.

And this to me is the most liberating aspect of being an actor, and even just a girl at a time when shows like Sharp Objects and Big Little Lies (another great show on Hotstar Premium), and films like Veere Di Wedding and Anaarkali Of Aarah are being made.

The next time I hear someone say, “Nice girls don’t do that!”, I know what I’m going to say — I don’t give a shit about nice. I’m just a girl! And that’s okay!

Swara is a an award winning actor of the Hindi film industry. Her last few films, including Veere Di Wedding, Anaarkali of Aaraah and Nil Battey Sannata have earned her both critical and commercial success. Swara is an occasional writer of articles and opinion pieces. The occasions are frequent :).

Watch the trailer of Sharp Objects here:


This article was published by the Scroll marketing team with Swara Bhasker on behalf of Hotstar Premium and not by the Scroll editorial team.