Following a six month ban on starting new accounts by the Reserve Bank of India (RBI), Paytm Payments Banks has launched a zero balance current account with features such as unlimited free digital transactions and free debit card etc.
This new feature targets individuals, sole business owners and other small businesses who could not meet the minimum required balance of current accounts offered by traditional banks.
“There are large number of small businesses who do not have a current account or do not actively use their current account for everyday payments. With our current bank account offering aims to provide the best in class banking facilities to businesses, especially small and micro enterprises,” said Satish Kumar Gupta, CEO Paytm Payments Bank
At the end of the day, account balances above INR 1 Lakh will be automatically transferred to a current account in a partner bank. However, there is no cap on amount deposits and transactions frequency during the day. Further, the unlimited cash deposits feature will also aid small merchants who receive large chunk of their payments in cash.
The payment bank said in a statement that it is targeting over 40 Mn SMEs in India with this account feature.
Launched in May 2017, Paytm Payments Bank is a mobile-first bank with zero charges on all online transactions (such as IMPS, NEFT, RTGS) and no minimum balance requirement.
In January 2019, the Reserve Bank of India (RBI) has allowed Paytm Payments Bank to restart opening new accounts for its consumers after almost six months of the ban. It was reported Paytm was asked to stop new creating new customer accounts because it was modifying its account opening process to introduce ‘current accounts’. Paytm Payments Bank had stopped enrolling new customers on June 20 following an audit by RBI.
The entity had set an aim to invest $500 Mn in KYC operations in order to reach 500 Mn bank accounts by 2020. According to a 2016 report by Google and Boston Consulting Group, the digital payments industry in India is projected to reach $500 Bn by 2020, contributing 15% to India’s GDP.