Paytm Payments Bank on Thursday said it has received the status of a scheduled payments bank from the Reserve Bank of India (RBI) by being included in the Second Schedule to RBI Act, 1934. The payments bank can now participate in government and other large corporation-issued request for proposals (RFPs), RBI-run primary auctions, fixed rate and variable rate repos, reverse repos, and marginal standing facility (MSF).
It will also be eligible to partner in government-run financial inclusion schemes and explore other new business opportunities. It said that as per the RBI Act, 1934, a banks satisfying the central bank that their affairs are not being conducted in a manner detrimental to the interests of depositors are included in the second schedule.
“We have witnessed fast adoption of digital banking services, with users appreciating the new era of banking in India. The inclusion of Paytm Payments Bank in the Second Schedule to the Reserve Bank of India Act, 1934, will help us innovate further and bring more financial services and products to the underserved and unserved population in India,” said Satish Kumar Gupta, managing director and chief executive officer of Paytm Payments Bank.
Prior to Paytm Payments Bank, India Post Payments Bank had received the scheduled payments bank status from the RBI in 2019 and Fino Payments Bank received the tag earlier this year. Payments banks face a challenging business model as they have an upper ceiling of Rs 1 lakh in deposits intake, while simultaneously not being allowed to lend or issue credit cards, analysts said.
“Given that payments banks can accept up to Rs 1 lakh in deposit and are not allowed lending operations, typically such deposits get deployed in government securities and hence from this move, there will not be a significantly rise in terms of earnings or scale of operations. This will not be material enough,” a senior analyst at a domestic rating agency said.
Paytm Payments Bank has services including Paytm Wallet, Paytm FASTag, net banking and Paytm unified payments interface (UPI). The payment bank operates 33.3 crore Paytm Wallets and allows consumers to make payments at more than 87,000 online merchants and 2.11 crore in-store merchants. As per the release, over 15.5 crore Paytm UPI handles have been created and are being used to make and receive payments.