Paytm launches niche payments bank

Paytm launches niche payments bank

"Leveraging power of technology, we aim to become the preferred bank for 500 million Indians by 2020", said Renu Satti, CEO, Paytm Payments Bank.

India Post opened its payments bank in January 2017. You need not keep a minimum account balance, as these will be zero-balance accounts. Its parent company One97 Communications plans to invest Rs 400 cr initially. The Alibaba-backed company, which recently raised $1.4 billion from SoftBank, plans to bring half a billion users on its platform by 2020.

That's how Paytm founder Vijay Shekhar Sharma shared the announcement of the opening of Paytm's Payments Bank today.

Under the payments bank licence, Paytm wallet users will be transferred to Paytm Payments Bank unless the user notifies otherwise.

Payments banks can accept deposits of up to Rs 1 lakh per account. Paytm will roll out the beta banking app for its employees and associates for now.

Paytm Payments Bank will provide Rupay debit card to its customers at an annual subscription cost of Rs100 plus delivery charges.

Paytm says that this bank will be a mobile-first product with first-of-its-kind feature of cashback on deposits.

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The Paytm wallets will now move to Paytm Payments bank in the same capacity i.e. KYC wallet as KYC wallet and minimum KYC wallet as minimum KYC wallet. Presently, the account opening is invite-only to begin with, and interested customers can simply visit paytmpaymentsbank.com or get an invite via the Paytm iOS app.

To open an account, users need to complete KYC by signing up digitally. That means, the customer can make unlimited number of transactions via IMPS, UPI, and NEFT free of charge.

To offer an interest rate of 4 per cent per annum on deposits. In addition, current accounts for businesses and interest bearing savings accounts for individuals will be offered by bank. It will expand to 31 branches and 3000 customer's service year in the initial first year, said by the company. It will offer five free ATM transactions (in non-metro cities) per month, post which they will be charged ₹20 per ATM withdrawal.

Paytm's Payments Bank will be a new service offered by One97 Communications, approved for carrying out business by the Reserve Bank of India (RBI).

"Deposits will only be invested in government bonds that are used for the development of our nation", Paytm said.

In an interview with Bloomberg, Sharma said that Paytm was not going to use the customers' deposits to lend instead it was going to ask NBFC and others to lend on behalf of them.

Paytm Payments Bank was registered in August 2016 as a subsidiary of One97 Communications with Sharma holding a 51% stake in the company.

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