Reportedly the Payments bank concept appears to be a non-starter, including the government-owned india Post Payments bank, which is struggling to survive with little business being done. Meanwhile of the 11 entities that obtained the license to operate payments bank, 5 have opted out. Furthermore according to a report "An idea floated by former bank OF INDIA' target='_blank' title='rbi-Latest Updates, Photos, Videos are a click away, CLICK NOW'>rbi Governor Raghuram Rajan, the Prime Minister himself had inaugurated the india Post Payments Bank. However, after having opened 650 branches and created 3250 access points, the IPPB seems to be in deep trouble unable to even bear the burden of salaries to its employees".
Furthermore, the only way out now for india Post Payments bank appears to be to convert itself into a small finance bank. Accordingly, this is precisely what IPPB is doing now and it has already applied for a small bank license and is hoping to receive the regulator’s nod early next year.
Moreover once that happens, india Post’s banking venture can accept deposits beyond Rs 1 lakh and also give out loans. Apparently the same concept of reaching banking services to the remote villages and helping micro and small enterprises with funding etc. can help the organization and remain relevant. Hence there are limitations to the operation of a payments bank. Perhaps one main drawback is it cannot accept deposits beyond Rs 1 lakh. It cannot offer any loans either.