Paytm Payments Bank - everything you need to know
The new venture will start operations from May 23.
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Popular digital payments player Paytm, which shot to fame after the demonetisation experiment, is now branching out into the fast-growing payments bank segment.
Over the past few months, its parent firm – One97 Communications – has pushed hard to expand its businesses, with founder Vijay Shekhar targeting as many as 300 million new customers – a significant upgrade from its existing 200 million plus customers – on the back of the launch of new financial services such as deposits, wealth management, insurance and financial lending.
Paytm's payments bank will enter a market that is flush with competition: it recently welcomed a new entrant with much deeper pockets than its own – the Airtel Payments bank. However, its leap into the market will be aided by its recent round of funding. The company will benefit from the Japanese conglomerate SoftBank's over Rs 9,079 crore investment in Paytm – the largest fund infusion by a single investor in an Indian start-up.
The crucial transition to the Paytm Payments Bank can be expected to be a smooth affair, unlike the technical problems it faced post the November 8 demonetisation exercise, when users regularly complained of glitches with the app, and Paytm servers crashing during transactions.
The new venture will start operations from May 23. Ahead of its launch, we take a look at all that you need to know about the Paytm Payments bank.
What is Paytm new payments bank?
Paytm's Payments Bank will be a new service offered by One97 Communications, approved for carrying out business by the Reserve Bank of India (RBI). The payments bank will subsume and manage the existing wallet service, and separate permanent bank accounts that will bring with them a slew of financial features.
How to open a Paytm payments bank account?
Post the launch of the service on Tuesday (May 23), users will be invited to open a permanent account with the payments bank. As Paytm's new service is regulated by RBI's guidelines, so users will be asked to upload mandatory Know Your Customer (KYC) documents like Aadhaar and PAN.
Vijay Shekhar, founder, Paytm. [Photo: PTI]
What happens to the money in your Paytm Wallet?
If the customer chooses not to open an account under the payments bank, the money in their wallet will be transferred simply to a new wallet operated by the Paytm payments bank and will reflect in the Paytm app. The user will incur no charges. Customers, however, are also being given the option of discontinuing their wallet services altogether by notifying the company before May 23.
Why open an account in the payments bank?
The major difference over the existing wallet service will be the addition of new financial features that come with the accounts under the payments bank. For example, Paytm will offer interest on the money in its payments bank accounts, a feature not available under its wallet service. Other services like debit cards and money transfers found with permanent bank accounts will also be possible with the new service.
However, these will not exactly be the same as your usual bank accounts. Payments bank accounts will be capped to hold a maximum of Rs 1 lakh, and the bank, for now, will not be able to offer any loans or issue credit cards to their customers.