New Delhi, Feb 27: Airtel Payments Bank 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 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.
While Paytm Payments Bank gives a yearly rate of interest of a little over 4 per cent, India Post Payments Bank 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 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.