In the middle of the year 2015, The Reserve Bank of India had granted in principle approval to eleven entities to set up payment banks. These banks can accept deposits of up to one lakh rupees; issue ATM/debit cards and offer payment and remittance services. However, they cannot lend and will have to invest 75% of its funds in government securities. Though this step is revolutionary in Indian banking space but the presence of poor infrastructure in Indian economy, which is not free from illiteracy, poverty and government debt-dependent budget, may become the obstacles before it. Various questions have been arisen regarding competitiveness and long term viability of payment banks. Thus without considering the reform measures in practical, the mission of fulfilling the targets to serve the root level of Indian population through lead generation model will not be possible. Therefore, the spreads for payment banks are likely to be thinner.