Google has teamed up with Setu, a fintech specialising in providing application programming interfaces (APIs), to allow its users to book fixed deposits (FDs) through Google Pay, a person with knowledge of the matter said on the condition of anonymity.
In the initial roll-out, FDs of Equitas Small Finance Bank will be offered for up to one year. The maximum interest rate is 6.35%. Users will have to complete an Aadhaar-based KYC (know your customer) through a one-time password (OTP).
Setu has already created a beta version for the API, which Mint has reviewed. A second person with knowledge of the matter confirmed the development.
“The beauty of the system is that you can book an Equitas FD on Google Pay even if you do not have a savings account in Equitas Small Finance Bank. The money will flow out of your existing account and back into your existing savings account. Other banks, including Ujjivan Small Finance Bank and AU Small Finance Bank, are also in the pipeline. If successful, the system will also be extended to other payment apps,” said the second person. “While attention is usually focused on mutual funds and stocks, FDs are the largest component of savings in India. They are largely overlooked,” he said.
The beta version of the API offers FDs of various tenors including 7-29 days, 30-45 days, 46-90 days, 91-180 days, 181-364 days, and 365 days, with interest rates ranging from 3.5% for the shortest FD to 6.35% for the one-year FD. According to media reports, Google Pay has 150 million monthly active users in India.
Small finance banks have aggressively teamed up with fintechs to offer high-interest savings accounts and fixed deposits. Equitas Small Finance Bank has partnered with fintechs such as NiYO and Freo (Moneytap) to offer its savings accounts with interest rates of 7% for balances more than ₹1 lakh. Under Reserve Bank of India rules, small finance banks have to lend at least 75% of their adjusted net bank credit to priority sectors compared with 40% for scheduled commercial banks. At least 50% of their portfolios must consist of loans up to ₹25 lakh.
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