Paytm launches payments bank, to offer cashbacks on deposits
With the launch of Paytm Payments Bank, there are now three payments bank in the country which includes Airtel Payments Bank and India Post Payments Bank.
Paytm launched its Payments Bank on Tuesday and is expected to target 500 million customers by 2020. It will offer 4% interest rate, cash back on deposits, zero fees on online transactions and no minimum balance requirement. One97 Communications Pvt Ltd, the holding company of Paytm will invest Rs 400 crore initially into the bank.
The Paytm Payments Bank will be the first bank to offer cashbacks on deposits. The bank will offer a cashback of Rs 250 to customers depositing Rs 25,000 in the payment bank.
The first branch of the bank has been opened in Noida. The Paytm Payments Bank will expand to 31 branches and 3,000 customer service points in the first year, the company said.
Paytm Payments Bank’s interest rate is in line with all the large commercial banks, including State Bank of India, Bank of Baroda and ICICI Bank Ltd, which continue to offer 4% interest rate on savings account deposits. Some of the banks including Yes Bank Ltd and RBL Bank Ltd, offer 5.5-7.1% interest rate on savings accounts, depending on the deposit amount.
One97 Communications founder Vijay Shekhar Sharma has said all active wallet accounts on the payments app will be transferred to the payments bank. He personally owns a 51% stake in the payment bank, as per regulatory requirements, with the remaining stake owned by One97 Communications.
Renu Satti, company’s current vice-president business has been named as the chief executive officer of Paytm Payments Bank.
Payments banks can accept Rs 1 lakh per account. The bank will also roll out its banking app in the beta phase, initially for its employees, the company said .
Paytm Payments Bank Chairman Vijay Shekhar Sharma said in a statement…
“RBI has given us an opportunity to create a new kind of banking model in the world. We are proud that our customer deposits will be safely invested in government bonds, and be used for nation building. None of our deposits will be converted into risky assets.”