The first time around, payments banks—the country’s central bank’s biggest experiment in creating a half-bank half-payment entity—bombed. In the short two-year history of payments banks, everything that could possibly go wrong for them did. Crippling rules from the Reserve Bank of India (RBI). Check. Companies backing out. Check. Regulatory flip-flops on know-your-customer (KYC) norms. Check. Frauds. Check. Suspension and fine. Check.

Payments banks run by Airtel, Paytm* and Fino were asked to suspend operations in 2017 and 2018 for serious transgressions—ranging from not taking explicit consent to opening a bank account while doing KYC to not adhering to the Rs 100,000 (~$1,447) deposit limit that the RBI imposed on payments banks.