PayTM has received formal approval for its Payments Bank from RBI today. Yes its true Paytm Payments Bank (PPB) formally approved by RBI: Opening next month in Noida,. Earlier, RBI had provided an ‘in principle license’ to the founder and CEO Vijay Shekhar Sharma and as of today, the final license has been granted. According to Paytm, they will be commencing banking operations soon and it expects to start operations next month.
According to directions received from RBI, PayTM will be moving its wallet platform into the new Payments bank and any users were free to move their PayTM wallet money back into their bank accounts till 31st January 2017. Post the launch of the Payments bank, transfers between the wallet and the Payments bank account will be free of charge.
Payments banks can accept deposits from individuals and small businesses of up to Rs 1 lakh per account.
Customers who choose to opt out of the move can get in touch with the PayTM customer care. But if they want to stay with the move, full KYC wallets will be transferred as full KYC wallets into the bank and minimum KYC wallets will be transferred as minimum KYC wallets.
“Today, Reserve Bank of India gave permission to formally launch Paytm Payments Bank. We can’t wait to bring it in front of you,” Vijay Shekhar Sharma, founder of One97 Communications, said in a blogpost.
“No other role or responsibility means as much to me as the privilege of building Paytm Payments Bank, and I intend to take a full-time executive role in the Bank,” Sharma said further.
He added that at Paytm Payments Bank, the aim is to build a new business model in banking industry, focussed on bringing financial services to hundreds of millions of unserved or underserved Indians.
This banking license comes at a time when other players like Reliance Industries, Vodafone, Airtel and a few more are also in the process of getting banking license approvals. There have been multiple reports surrounding the Payment bank from Paytm, with some even stating that the bank will be offering a 14.5% interest rate which is definitely much higher than any other bank is offering at the moment. If this does turn out to be true, this might draw more users to the bank than any other reason at the moment.
When contacted, a Paytm spokesperson said the company hopes to launch operations in February with the first branch coming up in Noida, Uttar Pradesh.
According to Mr. Vijay Shekhar Sharma, “At Paytm Payments Bank, our aim is to build a new business model in banking industry, focussed on bringing financial services to 100’s of millions of unserved or underserved Indians. With power of technology and innovation-at-scale, we aim to become a benchmark in world of banking.”
Paytm was earlier slated to begin operations around Diwali last year. In 2015, RBI had awarded ‘in-principle’ approval to Vijay Shekhar Sharma, the founder of One97 Communications, to set up a Payments Bank along with 10 others.
With the objective of deepening financial inclusion, RBI kicked off an era of differentiated banking by allowing SFBs (small finance banks) and PBs (payments banks) to start services. A total of 21 entities were given in-principle nod last year, including 11 for payments banks.
Later, three entities — Tech MahindraBSE, Cholamandalam Investment and Finance CompanY and a consortium of Dilip Shanghvi, IDFC Bank and Telenor Financial Services — backed out of the payments bank licensing.
Currently, Airtel is the only player that has commenced Payments Bank operations. Aditya Birla Idea Payments Bank is expected to launch services in the first half of 2017.
Sharma will hold the majority share in Paytm Payments Bank, with the rest being held by One97 Communications.
Last month, One97 Communications had restructured its business ahead of the launch of the Payments Bank, merging the wallet business with payments bank operation.
Alibaba Group and its affiliate Ant Financial pumped in USD 680 million into Paytm’s parent One97 Communications last year, taking its total shareholding to over 40 per cent in the country’s largest mobile wallet operator, Paytm.
However, the Chinese entity will not have a direct shareholding in the payments bank.
Read more what paytm had posted on its blog…
Today, Everything changes, Again.
From Payments to Payments Bank.
Exactly three years ago, on January 3rd 2014, we launched our mobile wallet — Paytm. Today, Paytm has become the category leader and changed the way India pays.
From villages to cities, from corner vegetable stalls to milk booths, small shops to large retailers, everyone embraced the new way to pay by Paytm.
Now, we are embarking on a new and even more exciting journey.
Today, Reserve Bank of India gave permission to formally launch Paytm Payments Bank. We can’t wait to bring it in front of you.
At Paytm Payments Bank, our aim is to build a new business model in banking industry, focussed on bringing financial services to 100’s of millions of un-served or underserved Indians.
With power of technology and innovation-at-scale, we aim to become a benchmark in world of banking.
This is our chance to build something that every Indian can be proud of. No other role or responsibility means as much to me as the privilege of building Paytm Payments Bank, and I intend to take a full-time executive role in the Bank.
In this journey, we will keep our heads down, work harder
Further details about the bank and its offerings are yet to be known. Stay tuned to this space for more information and check this blog post for the actual announcement.