Paytm launched its Payments Bank on Tuesday and became the third entrant in the after Airtel Payments Bank and India Post Payments Bank. Over the course of next one year, the company plans to roll out 31 branches and 3,000 customer service points across the country. Currently, Paytm Payments Bank saving account is available on invite-only basis and Paytm’s Wallet business will now operate under Paytm Payments Bank.
Among the three payments banks, Paytm is offering the lowest annual interest rate of 4% on saving account against Airtel’s 7.25% and India Post’s 5.5%. The company will also offer 1% cashback to its first million customer who will deposit Rs25,000 in the payments bank account making it the first bank to offer cashbacks on deposits.
The wallet will not be converted into a bank account and will continue to function like a wallet as earlier without any benefits of the payment bank account. Users can request for a invite on its mobile app or website and the wallet balance will be transferred to bank account post the KYC.
According to RBI guidelines, payment banks can accept deposits upto Rs 1 lakh and can offer debit cards and financial products like mutual funds and insurance via tie-ups with other banks. “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 into risky assets,” said Vijay Shekhar Sharma, founder of Paytm and also the Chairman of Paytm Payments Bank.
Sharma holds 51% stake in Paytm Payment Bank and the remaining stake in the company is owned by One97 Communications Pvt Ltd. According to RBI guidelines, the promoter must hold at least 40% stake in the company, for the first five years.
Paytm claims to have 220 million wallet users but they will have to fulfill the KYC requirements in order to become an account holder at Paytm Payment Bank.