Ecommerce and payments platform Paytm has finally geared up to roll out its payments bank on May 23, 2017.
The development was confirmed by Paytm founder Vijay Shekhar Sharma on his social media handle.
— Vijay Shekhar (@vijayshekhar) May 17, 2017
Related Article: Paytm Payments Bank Reports Losses Of $4.6 Mn
One97 Communications, the parent company of Paytm had 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. As per a blogpost by the company Renu Satti will be the CEO of Paytm Payments Bank. Satti has been with One97 communications since 2006.
In 2014 budget, Finance Minister announced plans of putting a structure in place to allow differentiated banks serving niche interests, local area banks, payment banks etc. This was aimed to meet credit and remittance needs of small businesses, the unorganised sector, low income households, farmers and migrant work force. The Reserve Bank received 41 applications for payments banks, of which 11 were granted an in-principle nod.
Finally in August 2015, the Reserve Bank of India had granted payments bank licenses to 11 companies, including Airtel and Paytm. Besides the two, Vodafone, Reliance Industries, Idea Cellular, Paytm, FINO Paytech, India Post and National Securities Depository Limited received payments banks licenses.
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.
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. According to Inc42 Datalabs, fintech has brought in $1.77 Bn in funding in India from 2014 to October 2016,with Paytm’s $680 Mn funding from back in September 2015 making up 38.5% of the entire sum. There was a total of 158 deals with 111 of them divulging their funding figures.
While Paytm plans to be one of the flagbearers for Digital India, a process begun back in November 2016 during the demonetisation drive,multiple players have emerged to cash-in on the ‘digital economy’ wave. From ecommerce companies like Amazon that secured a licence from the RBI to operate a prepaid payment instrument (PPI); Instant messaging app WhatsApp that is expected to launch a peer-to-peer payment system in India, within the next six months; to Sweden-based Truecaller, introducing a new UPI-based mobile payment service ‘Truecaller Pay’ through a tie-in with ICICI Bank, the digital wallets is reaching a tipping point with both international and local interest. In such a scenario, Paytm’s decision to further penetrate into the fintech sector and serve the underserved is a smart move. But it is a wait and watch game for now as to how well it can execute for the same.