“A new star is born!”
The Paytm Payments Bank will be the first bank to offer cashbacks on deposits. Every customer to open a Payments Bank account will get a cashback of INR 250 as soon they bring deposits of a total of $387(INR 25K) in their bank account. Also, customers will be given zero charges on all online transactions (such as IMPS, NEFT, RTGS) and no minimum balance requirement. For savings accounts, the company would also offer an interest of 4% per annum. Paytm plans to open 31 branches and 3,000 customer service points in a year.
Initially, Paytm Payments Bank accounts will be available on an invite-only basis. In the first phase, the company will roll out its beta banking app for employees and associates. Paytm customers can request an invite by going to www.PaytmPaymentsBank.com or on the Paytm iOS app. The company will also offer current accounts to its merchant base of more than 45 lakh+. It is setting up KYC (Know Your Customer) centres across India to complete KYC for customers and make them eligible for a Payments Bank account.
Related Article: Paytm Payments Bank Appoints New Board Members; Commences Operations
Speaking at the launch, Vijay Shekhar Sharma stated, “RBI has given us an opportunity to create a new kind of banking model in the world. We are proud that our customer deposits will be safely invested in government bonds, and be used for nation-building. None of our deposits will be converted in to risky assets”
Paytm, which bet big on its zero cost QR Code-based payment solution in the digital payments space, is hoping to replicate this success in the banking sector and further drive cashless transactions with the Paytm Payments Bank. The current Paytm Wallet will move to the Paytm Payments Bank in the same capacity, i.e. KYC Wallet as KYC Wallet and minimum detail KYC Wallet as minimum detail KYC Wallet, a development that was reported back in December 2016. Users will continue to be able to use their Paytm Wallet in the same manner as before.
Renu Satti, the first CEO of Paytm Payments Bank added, “We are very excited to launch Paytm Payments Bank and bring financial services to the unbanked segment of Indians. Our ambition is to become India’s most trusted and consumer-friendly bank. Leveraging the power of technology, we aim to become the preferred bank for 500 Mn Indians by 2020.”
One97 Communications, the parent company of Paytm received permission from the Reserve Bank of India to formally launch the Paytm Payments Bank in January 2017. In December 2016, One97 Communications issued a public notice that it would be transferring its wallet business, to the newly-incorporated Payment Bank entity.
Paytm was initially planning to launch the Payments Bank around Diwali last year, in November 2016, but Airtel beat Paytm to become the first payments bank in the country to go live. It launched the pilot of its Payments Bank Limited (“Airtel Bank”) in Rajasthan. Later in January 2017, Airtel finally began operations in 29 states. It offered an interest rate of 7.25 % p.a. on deposits in savings accounts.
India Post too opened its payments bank in January 2017. The first two branches of the bank were opened in Ranchi and Raipur. The bank offers an interest rate of 4.5% on deposits up to $387(INR 25K), 5% on deposits from $387-$775(INR25K-50K), and 5.5% on$775-$1.5K( INR 50K-INR 1 Lakh).
The Indian fintech market is forecasted to touch $2.4 Bn by 2020, a two-fold increase from the market size currently standing at $1.2 Bn. As a per a report by Google and Boston Consulting Group, released in July 2016, the digital payments industry in India is projected to reach $500 Bn by 2020, contributing 15% to India’s GDP. With Airtel, India Post, and Paytm Payments bank going live and eight more to follow, these differentiated banks are expected to boost financial inclusion in the country by aiming to meet credit and remittance needs of small businesses, the unorganised sector, low income households, farmers and migrant work force.
In the coming few months, as Paytm shifts focus onto the Payments Bank and away from digital wallet, ecommerce behemoth Amazon that secured a licence from the RBI to operate a prepaid payment instrument (PPI) is expected to launch a wallet while instant messaging app WhatsApp is expected to launch a peer-to-peer payment system in India, within the next six months.