Paytm, India's largest mobile wallet company, has received the final license from the Reserve Bank of India to launch a payments bank. In a blog post on its website, the company said that the central bank has given it permission to launch the payments bank for which it had received an in-principle approval in August 2015.
A spokesperson for Paytm told BloombergQuint that the launch is planned for February.
At Paytm Payments Bank, our aim is to build a new business model in banking industry, focused 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 Blog Post
Paytm's Vijay Shekhar Sharma signed off on this blog post and said that he intends to take on a “full time executive” role in the new payments bank. In February 2016, Paytm had brought on board Shinjini Kumar to head the payments bank as chief executive officer.
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.Vijay Shekhar Sharma, Founder, Paytm
Hello World. #PaytmPaymentsBank https://t.co/IV3BEZh94G
Paytm is likely to become the second to launch after Airtel rolled out its payments bank in the month of November. To lure customers, the mobile operator provided a hefty 7.25% interest on saving accounts and free voice calling minutes for every rupee deposited.
While Paytm has not revealed its strategy, it has earlier said that all of its wallets will be transferred to the payment bank and that customers will be given an option to open a bank account linked to that wallet. Those who have already done KYC for their wallets won't have to do it again. In an interview to BloombergQuint in September, Sharma had indicated that they would allow customers to sweep their savings into money market funds which would have no withdrawal restrictions.
According to the Paytm spokesperson quoted above, the first branch of the Paytm payment bank will be in Noida. The entity will launch with an initial investment of Rs 400 crore.
In 2015, the RBI gave “in-principle” approval to 11 payments bank applicants but three entities surrendered their licences thereafter, leaving eight players in the fray. Most of those who remain in the fray are yet to detail their plans.
Also Read: Can Paytm's Vijay Shekhar Sharma Disrupt Indian Banking?
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