Jio Payment Bank started - Official confirmation from RBI

One more good news for Jio users. The Reserve Bank of India has officially announced that Reliance Jio Payment Bank Limited has commenced operations as a payments bank with effect from April 3,2018. This is a joint venture between Reliance Jio and SBI (State Bank of India). RIL and SBI have a share of 70 and 30 respectively.

With the help of this partnership, State Bank of India (SBI) is looking to leverage Reliance Jio’s telecom network to connect even the remote customers, especially the rural people where SBI has not yet penetrated its wing. Under this venture, Reliance Jio will have access to the SBI’s wide customer base across the country. The company had planned to launch the payments bank with the Reliance Jio feature phone, which it has already started selling.

The RBI initiated the Idea of Online Payment Banks to support financial requirements of citizens, especially with a focus on extending services to low income households, small business, unorganized sector users, migrant workforce. The services include opening a small savings account, payment and remittances.

Reliance Jio was one of the eleven applicants for license of starting a Digital Payments Bank. These 11 applicants were given in-principle approval to begin work on starting payments bank. Among the telecom leaders, Bharti Airtel was the first to start the payments bank in November 2016. However, in next few months, it had to face extensive criticism for opening bank accounts without the prior approval from Airtel customers. The UIADI identified that Airtel Payments bank not only created unauthorized bank accounts without proper customer approval ( the Aadhaar based eKYC system was used for this), it also diverted the subsidy amounts to the newly created bank accounts without making aware of this to the beneficiaries.

After this incident, RBI and UIADI have tightened the rules around approving new payments bank and the way they work. With new entrants into this sector, it is expected that the business of banking is going to be much easier and sophisticated. With Jio Payments bank beginning operations, it can be believed that this aim will get a huge boost, especially with the cheap feature phone like JioPhone reaching remote corners of Rural India.