Payments Bank bridging the financial gap in Indian

Mint

07-07-2025

India is emerging as a global leader in digital transactions, and the transformation story is only going to expand further from here. In a country as expansive and varied as India, banking's core principle is access, extending far beyond the traditional confines of physical branches. The country's digital transactions are projected to triple by FY2029, underscoring this shift towards widespread financial inclusion.
A key participant in this change is Airtel Payments Bank, which is democratising access to banking with an extensive network of over 5,00,000 banking points, business correspondent networks, and doorstep banking services, particularly in rural India. In an interview with LiveMint, Ganesh Ananthanarayanan, COO of Airtel Payments Bank spoke about the approaches driving this change and shared stories from the ground elucidating the empowering role of digital finance for women. He also offered perspectives on the future of inclusive banking in the country.
Banking in India is undergoing a fundamental shift – it is moving beyond traditional branch-based services towards broader availability. 'Close to 480 billion digital transactions are likely to happen in the next two to three years in India. In India, in a year, about half a billion Indians are doing digital transactions on a regular basis. That's a size and scale which has changed over several years, of course, post-COVID, some of these metrics have increased,' he said.
This shift indicates a growing national acceptance of digital financial interactions. However, India's digital journey has a unique characteristic. It involves an integration of physical and digital elements. 'India is unique in wanting a physical-digital sort of structure, which means you also want your friendly neighbourhood kirana, with whom you'd want to have a conversation and talk about multiple things, including the weather and politics, and also do your financial transactions,' Ananthanarayanan explained.
This 'phygital' approach, combining digital convenience with human interaction, holds a lot of importance, especially in Tier 4, 5, and 6 regions with lower data penetration.
The need for a phygital model gets underlined when examining rural financial infrastructure. 'There are 635,000 villages in the country. There are only 55,000 ATMs in rural, which means you've got one ATM for maybe eight to nine villages. The problem in rural India is that consumers have to actually travel 10 to 12 kilometres to go to an ATM and withdraw cash. Now this is where the need for a physical branch kind of a concept,' Ananthanarayanan said.
This is where the concept of the Business Correspondent (BC) agent, often a local kirana store owner, comes into play. Converting these trusted local figures into BC agents, enabled for financial transactions like cash withdrawal, deposit, and money transfer, has been a significant development. 'We have got close to five lakh BC agents in the country on the ground. Almost 70 per cent of them are in Tier 4, 5, and 6, which are villages with less than 5000 population, and I think that's a place where financial inclusion is happening at a notable scale,' he added.
One of the persistent challenges in expanding financial inclusion, particularly in rural areas, has been addressing initial reservations about formal banking. 'A number of consumers, especially women in rural areas, typically save 300, 400, 500 rupees every month. They get money from their spouses or from their relatives or from their earnings, and typically they keep it as cash in Gulag or under their bed or under their mattress,' Ananthanarayanan said, highlighting that this practice carries risks of theft.
Airtel Payments Bank addresses this by offering a secure and accessible alternative – women are opening bank accounts with the nearby kirana outlet, who doubles up as a BC agent for Airtel Payments Bank. 'They take this 100 rupees every week and deposit money into that bank account because they know it is going to be safe. Over a period of time, they accumulate some amount of money which they use for their daughter's education or marriage or any other event,' he said. This shift in behaviour indicates growing trust in digital savings, particularly among women.
Technology forms a core part of their operations. 'We are a digital bank and use technology and AI extensively to get stuff going,' he added.
The role of digital finance in empowering women merits attention. Of Airtel Payments Bank's 5,00,000 BC agents, over 1,00,000 are women. 'They are run by women who are effectively entrepreneurs, whose full-time job is actually to run that BC agent, where they open bank accounts for everyone, do financial transactions and earn their livelihood out of that,' he said. These women entrepreneurs not only support their households but also serve as advocates for financial literacy within their communities.
The impact extends to women as account holders as well. 'We've seen that shift notably, where, as I mentioned, they open a bank account with us, and what they do is to make sure that they deposit 100, 250 rupees every week into that bank account and use that as a savings account. Close to a third of our consumers whom we onboard every month are women, and in states like Maharashtra and Orissa, approximately half the accounts whom we open every month are accounts opened by women,' said Ananthanarayanan.
For many – especially those in rural India, the concept of a 'payments bank' can be unfamiliar. He outlined it with three key tenets – access, trust, and security.
'For low-income consumers, I think the first and important thing is access, where you can open a bank account with us at a kirana outlet, who is likely your friend, who is possibly a few minutes away from where you stay, who is possibly staying in the same village as you are,' he said.
The second factor is trust. 'We come from the same brand as Airtel, which is among the more trusted brands in the country. And hence, there is trust which consumers have when they have a relationship with Airtel Payments Bank,' he further added.
Another key aspect is security. 'You can do all your financial transactions with a biometric, where you don't need to remember an MP or an OTP, you give your biometric, you withdraw cash, you give a biometric, and you can transfer funds,' Ananthanarayanan further said. This biometric authentication can simplify the process and enhance security, especially for those less familiar with digital passwords or OTPs.
Cybersecurity remains a concern, especially with the increase in digital transactions. Airtel Payments Bank addresses this with a multi-layered security framework that includes a third-factor authentication. 'A financial transaction will go through only if we are sure that your phone, your SIM has initiated it. Even if you have, by mistake, shared your OTP, which ideally you shouldn't, but even if you did, the third factor of authentication helps ensure that the transaction gets declined,' he explained
Airtel Payments Bank has also introduced a panic button feature. 'On our phone banking section, there is a button called a panic alarm, where the moment you click on that, the account is frozen, all transactions come to a halt, so that there is no further loss which has happened,' Ganesh said. This immediate action can help prevent further financial loss and alerts the bank to a potential fraud, allowing them to intervene.
Airtel Payments Bank is guided by a dual philosophy of opportunity and responsibility with a core purpose to drive digital and financial inclusion. The responsibility extends to safeguarding customer funds and data.
'We want to make sure that we do it in a manner in which customers' monies are protected, because ultimately, we are helping transfer money from one party to another, and hence people's monies are involved here,' he further said.
Data privacy is also given paramount importance and data is primarily used for transaction monitoring, identifying unusual patterns to help protect customers, not for unsolicited marketing or sharing. 'To me, being responsible and having responsible growth, I think, is an important aspect, and that's how we balance this,' Ananthanarayanan concluded.