Paytm Payments Bank Gets Scheduled Bank Status From RBI

The Reserve Bank of India (RBI) has recognised Paytm Payments Bank as a scheduled bank, allowing it to expand its banking operations.

In a statement, Paytm Payments Bank said that it has been included in the Second Schedule of the Reserve Bank of India Act, 1934.

Now the bank can participate in government d other large corporations issued Request for Proposals (RFP), primary auctions, fixed-rate and variable rate repos, and reverse repos, along with participation in Marginal Standing Facility. It would now also be eligible to partner in government-run financial inclusion schemes.

According to the RBI Act 1934, for its inclusion in the second schedule, a bank has to satisfy the RBI that its affairs are not harmful to the interests of its depositors.

For being accorded a scheduled bank status, a financial institution should have a paid-up capital and reserves of an aggregate value of at least INR 5 Lakh. Paytm Payments Bank has now become eligible for taking loans from the Reserve Bank of India at the bank rate. Bank rate is a rate at which the RBI provides the loan to commercial banks without keeping any security. 

Speaking about the same, Satish Kumar Gupta, MD & CEO of Paytm Payments Bank said, “The inclusion of Paytm Payments Bank in the Second Schedule to the Reserve Bank of India Act, 1934, will help us innovate further and bring more financial services and products to the underserved and unserved population in India.”

Vijay Shekhar Sharma-led Paytm Payments Bank offers several payment instruments including Paytm Wallet, Paytm FASTag, net banking and Paytm UPI. According to the payments bank, it powers 33.3 Cr Paytm Wallets and enables consumers to make payments at over 87,000 online merchants and 2.11 Cr in-store merchants. 

As of March 31, 2021, the Bank had over 64 Mn savings accounts, and over INR 5,200 Cr deposits, including savings accounts, current accounts, fixed deposits with partner banks, and balance in wallets. 

The payments bank competes with Airtel Payments Bank and Jio Payments Bank, Fino Payments Bank among others. In February 2021, Fino Payments Bank had been included in the Second Schedule of the RBI Act.

In October this year RBI imposed a penalty of INR 1 Cr on Paytm Payments Bank for violating provisions of the Payment and Settlement Systems Act, 2007 (PSS Act).

One97 Communications, the parent company of the payments bank went public last month with its INR 18,300 Cr IPO.

For the July-September quarter, the fintech giant, which owns Paytm recorded a 63.6% increase in its revenue from operations during the said period at INR 1,086.4 Cr.

The digital payments major attributed the jump in revenue to a 52% growth in non-UPI payment volumes (GMV) and more than three-times growth in financial services and other revenue. Its net losses, however, widened by 8.42% to INR 473.5 Cr during July-September quarter, from INR 436.7 Cr reported a year ago.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.