After getting an in-principle approval from the Reserve Bank of India (RBI) back in August 2015, Paytm has got a licence to operate a payments bank, CEO Vijay Shekhar Sharma announced in a blog post. The new venture will be called Paytm Payments Bank as per directions from the RBI.
Sharma didn’t add any other details regarding the actual launch of the payments bank and did not give other details regarding the interest rate offered to customers or how the savings account would be structured. He added that he will be taking a “take a full-time executive role” in the payments bank.
It’s worth noting that Sharma, the CEO of Paytm, is the licensee for the Payments Bank limited. When the in-principle nod was awarded, Sharma had told MediaNama that the approval was given Paytm, and not to him as an individual. Sun Pharma founder Dilip Shantilal Shanghvi was the other individual to be granted a license.
According to Mint, Sharma has invested Rs 112 crore in the business, while the rest of the Rs 220 crore investment has come it from One97 Communications. He will own 51% in Paytm Payments Bank, while One97 will hold the rest.
According to RBI guidelines, promoters of the payments bank should hold at least 40% of its paid-up equity capital for the first five years of its operations. Meanwhile, foreign shareholding in the payments bank would be as per the FDI policy for private sector banks, currently capped at 74% of the paid-up capital from all sources.
In December, Paytm announced that it would be shifting its wallet customers to the payments bank. The transfer of the wallet to the payments bank was done without explicit consent of the customer, though they did have the right to decline the transfer by December 21, 2016. Customers were also given the option to transfer money out of the wallet and in to their bank account.