After launching the Airtel Payments Bank in January this year, Finance Minister Arun Jaitley also formally inaugurated Paytm Payments Bank in the capital today.
Speaking at the event, Vijay Shekhar Sharma, Founder and CEO of Paytm stated, “India is at a cusp of a financial revolution. The demography and access to financial services will create a ton of jobs in the country and Paytm is very proud to be a part of this financial services revolution. Paytm Payments Bank will work towards creating a massive number of jobs in the long run.”
The bank will have zero charges on all online transactions and no minimum balance requirement and will offer free personalized RuPay digital debit card. It will also offer a 4-7% interest rate on savings account, and up to 7% on a linked sweep out Fixed Deposit. The company has planned an investment of $500 Mn in KYC (Know Your Customer) operations. It is setting up KYC centers across India to complete KYC for customers and make them eligible for a Payments Bank account.
Renu Satti, MD and CEO of Paytm Payments Bank added, “Paytm Payments Bank is the country’s largest mobile-first, technology-led bank. By virtue of reaching every nook and corner of the country, we will be able to bring the large un-served and under-served population to the mainstream economy. We are committed to offering the most transparent, safe and trusted banking to masses.”
A Quick Look At Paytm Payments Bank
Just last week, Paytm Payments bank had received yet another cash infusion from the parent company. Paytm’s parent company One97 Communications and Vijay Shekhar Sharma together invested $18.84 Mn (INR 122 Cr) in Paytm Payments Bank. This takes their total infusion in the payments bank to $61.78 Mn (INR 400 Cr).
The fund infusion follows the September cash raise wherein the Payments Bank had reportedly secured $9.3 Mn (INR 60 Cr) from Sharma and other existing investors. The development came at a time when the firm was gearing up to launch its own debit card.
Incorporated in August last year, the Payments Bank formally launched operations in May 2017. Between August 2016 and March 2017, it reported losses of around $4.6 Mn (INR 30.7 Cr). According to its MCA filings, the firm saw a turnover of $378K (INR 2.47 Cr) during the said period.
Currently, of the eleven entities which received in-principle licences to launch payment banks, only four are operational. These include India Post Payments Bank, Airtel Payments Bank, Fino Payments Bank and Paytm Payments Bank. But even with just four in the fray, these payment banks have not been able to attract too many deposits so far. A recent report in Bloomberg Quint, based on an RTI request to the RBI, showed that the four payments banks were slow in mobilising deposits and had outstanding demand deposits worth $36.52 Mn (INR 236.45 Cr) only as on September 30. Of these, Paytm Bank held outstanding demand deposits worth $502K (INR 3.25 Cr) as on September 30.
Nevertheless, Vijay Shekhar Sharma had earlier stated his intentions to reach 500 Mn bank accounts by 2020. Given that the digital payments segment in India is poised to reach $500 Bn by 2020 according to a report by Google and Boston Consulting Group, it seems Paytm is all in to rake in a part of this pie through the Paytm Payments Bank despite early losses and slow mobilising customer deposits. Besides its commitment to KYC operations, this month, Paytm also tied up with ICICI Bank this month to offer short-term, interest-free credit line aptly called Paytm-ICICI Bank Postpaid to customers.