Airtel Payments Bank’s customers will get interest at a rate of 7.25% on deposits, the company said in a statement. (Reuters)tel

Bharti Airtel Ltd today launched India’s first payments bank with a commitment to invest Rs 30 billion to develop a pan India banking network and digital payments ecosystem.

Airtel’s nationwide launch across all the 29 states comes days ahead of Paytm’s scheduled launch of its payments bank operations next week. It had been running a pilot in Rajasthan Andhra Pradesh and Telangana for little less than two months, with over one million customers already on its network.

Airtel Payments Bank’s customers will get interest at a rate of 7.25% on deposits, the company said in a statement. Also, the customers will be able to transfer money to any bank account in India free of charge from Airtel-to-Airtel numbers within Airtel Payments Bank.

“Just like mobile telephony leapfrogged traditional telecom networks to take affordable telecom services deep into the country, Airtel Payments Bank aims to take digital banking services to the unbanked over their mobile phones in a quick and efficient manner,” Bharti Enterprises’ Chairman Sunil Bharti Mittal said at the launch event. “Millions of Indians in rural areas will get their first formal banking experience with Airtel Payments Bank,” he added.

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Airtel said it will have a network of 250,000 banking points through its retail stores across 29 states from day one.

This is more than the total number of ATMs in the country. Customers will be able to open savings accounts, deposit and withdraw cash across any of these banking points. The company hopes to leverage its nationwide network of over 1.5 million retail outlets to help expand its banking services.

Further, the company said that Airtel Payments Bank will develop a nationwide merchant ecosystem of over five million partners including small kirana stores, grocers, pharmacies, restaurants, etc. These merchant partners will accept digital payments from Airtel Payments Bank customers over mobile phones.

Airtel, India’s largest telecommunication services provider, got a payments bank licence from the Reserve Bank of India in April last year – the first in India.

Airtel Payments Bank customers will be able to avail banking services without paperwork, including using E-KYC through their Aadhaar UID numbers for opening accounts.

Earlier this month, Paytm – India’s largest mobile wallet by number of users – also received final approval from RBI to launch a payments bank. Paytm claims it has over 150 million e-wallet users.

RBI had given in-principle approval to 11 entities in 2015 to launch payments banks, which could take short deposits of up to Rs 100,000 from each customer, and could not lend money.

Three entities already surrendered their licenses, leaving in fray Idea Cellular, Vodafone India, India Post Payments Bank and Reliance Industries, among others.

Digital wallets saw a record surge in users after Prime Minister Narendra Modi unexpectedly demonetised high value currency notes in order to curb black money and counterfeiting. With the government actively pushing for digitisation and cashless economy, and with the rising smartphone penetration and expanding internet connectivity, payment banks and e-wallets are expected to gain in a major way.