Paytm is among 11 companies who got the license for Payments Bank in the first round in 2015. The company was targeting a Diwali launch of the bank, but it missed the deadline twice as final approval from RBI didn’t go through. Now, the founder of Paytm, Vijay Shekhar Sharma has finally announced that the company has got the last approval from RBI and it is all set to launch the Payments Bank in next month. At present out of 11 companies, only Airtel has been successful in launching a fully functional Payments Bank. The initial testing is going on in Rajasthan and Airtel is seeing promising results.
Statement from the founder of Paytm
Vijay issued a statement about the final approval via a blog post on Paytm. He wrote that the main aim of the company will be to include the financially un-served and underserved 100s of millions of Indians. The company is thriving to become a benchmark in the world of banking with the help of technology and innovation-at-scale.
Just a few hours before the official announcement of the Payments Bank, Paytm also announced that it has started accepting money via UPI to load the eWallet. Now, you have to understand one point here. Paytm is only serving as a merchant as of now. It is not connected to UPI as a bank. In case you want to transfer money from Paytm to your bank account, you can only do it via IMPS or NEFT whichever is available.
Paytm has already announced about payments bank in December
When Paytm made an official announcement about Payments Bank in December 2016, the company clearly mentioned that it is going to merge eWallet and Payments Bank. That means when the transition will happen, the balance in your eWallet will become the balance of your bank account with Paytm.
The government is allowing a deposit of maximum 1 lakh in the payments bank. The payments bank can give interest on the deposits but cannot issue credit cards or loans to its customers. However, they can issue debit and prepaid cards. Airtel has decided not to issue debit cards in the initial stage. It will be interesting to see how Paytm goes about it. Also, Airtel is offering an interest rate of 7.5% on the deposit. The payments banks that follow the lead has to match the interest rate to keep up with the competition.
About payments bank
If you are not aware of what is a payments bank, you can call it a bridge between prepaid wallets and operational banks in India. The working is slightly different from a bank as a payments bank cannot offer loan or credit card. Also, it can only invest the deposited money of the account holders in government securities. At the moment, 11 different companies including Airtel and Paytm hold a license for payments bank. Only Airtel and now Paytm has got the final approval for starting the operations. Rest of the companies are working on the system. These payments bank will make it easier to join the banking system much easier in comparison to banks. Which in fact is quite crucial at the moment due to the aftermath of demonetization.