Are Payment banks a competitive threat or addon to the traditional banking.

Few Days before i read a news that RBI governor “Mr. Raghuram Rajan” announced 13 new banks, Infact 2 banks and 11 payment banks.
Raghuram Rajan
First thing came in my mind was that how these so called traditional banks let that happen , I mean who like the competition at such a vast level . Then i thought what if these payment banks are not competition to them, infact this is what existing banks wants to happen from a long time. Now you ask why ???

Actually retail customer and their small transactions are overhead to these traditional banks they only like Corporate user,Loan user(retail and corporate both),Credit card users etc. but they have to entertain retail user because of RBI norms. Now days when retail customer is purchasing approximately everything online and making many transaction in one day, this overhead is increasing more and more to these banks . On the other hand these payment banks will be very happy to entertain these customers because their business model will depend on selling things online, collaboration with merchant sites(Amazon, Flipkart, Snapdeal etc), online advertisements etc, So they will not have any conflict or competition with each other.
In payment banks you can have money upto 1 lakh,they will provide interest on that money like saving account. So now question arise if a retail customer like you and me have both options, why i will go for payment bank instead of existing bank. So to attract customers these banks will start providing cashbacks on online purchases , which existing banks don’t do .

Payments banks add-ons, not competitors: Raghuram Rajan

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