Google has partnered with Setu, a fintech company that specializes in providing application programming interfaces (APIs), to allow its users to book fixed deposits (FDs) through Google Pay, said a person familiar with the matter. on condition of anonymity.
Initially, Equitas microfinance bank cash deposit will be offered for up to one year. The maximum interest rate is 6.35%. Users will have to complete Aadhaar (Know Your Customer) based KYC via a one-time password (OTP).
Setu has already created a beta version of the API. Another person familiar with 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 FD’s of different duration including 7-29 days, 30-45 days, 46-90 days, 91-180 days, 181-364 days, and 365 days, with interest rates ranging between 3.5% less. 6.35% FD for one year FD. According to media reports, Google Pay has 150 million monthly active users in India.
Microfinance banks have actively collaborated with financial technology to offer high-interest savings and fixed deposit accounts. Equitas Small Finance Bank has partnered with fintech such as NiYO and Freo (MoneyTap) to offer their savings accounts at a 7% interest rate for balances above â‚¹ 1 lakh. Under RBI rules, small financial banks must lend at least 75% of adjusted net bank credit to priority sectors compared to 40% to registered commercial banks. At least 50% of your portfolio must consist of loans up to â‚¹ 25 lakh.
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