Paytm to commence payments bank services this summer

Paytm to commence payments bank services this summerPaytmPaytm/ Facebook

Paytm, a mobile payment services and e-commerce firm, is planning to commence its payments bank operations this summer.

The company has rolled out an internal project named “Project Pokhran” to recruit people and set up offices for payments bank services. Global consultants EY (Ernst & Young) and McKinsey are the advisers to the company for its new business.

In August last year, Vijay Shekhar Sharma, founder and chief executive of One97 Communication that owns Paytm, was among the 11 applicants to receive “in-principle” approval by the Reserve Bank of India (RBI) to open payments banks.

These entities can accept cash deposits, permit remittances and roll out “simple financial products”. They can accept savings deposits up to Rs 1 lakh from a customer, but a payments bank is not allowed to lend to customers, like commercial banks.

The RBI is said to be working on “fine-tuning its own systems” for the payments banks before they launch their services.

Earlier, Paytm had planned the launch of the service by April 2016, but now the company has delayed the roll out as it awaits the “go-ahead” from the RBI, a source told Business Standard.

Sharma hasn’t opened about the delay yet.

The company will have its banking headquarters in Noida (NCR), next to New Delhi, and plans to set up 20 branches for the payments bank.

The minimum capital required to set up a payments bank is Rs 100 crore and the banks will have to invest 75% of their funds in government securities.

Paytm is likely to announce the name of its banking business head in February after receiving permission from the central bank, Sharma said.

Copyright 2000 © Finance solutions