Indian payment facilitator Paytm announced on Tuesday (Jan. 3) that the Reserve Bank of India has granted the company the final go-ahead to launch Paytm Payments Bank.
Paytm was granted in-principle approval for the payments bank in 2015.
“At Paytm Payments Bank, our aim is to build a new business model in banking industry, focused on bringing financial services to 100’s of millions of un-served or underserved Indians. With power of technology and innovation-at-scale, we aim to become a benchmark in world of banking,” Paytm founder Vijay Shekhar Sharma said in a blog post.
The RBI established licensing guidelines for payments banks in 2014. In a press release at the time, the bank stated that the objective of this special purpose bank was to “further financial inclusion by providing (i) small savings accounts and (ii) payments/remittance services to migrant labour workforce, low income households, small businesses, other unorganised sector entities and other users.”
The Reserve Bank of India limits the activities payments banks can undertake. They may not issue credit cards or make loans, and they are limited to a maximum balance per individual. They can issue debit / ATM cards and provide payments and remittance services.
This is the latest in a string of announcements Paytm has made since the government of India announced its policy of demonetization, which resulted in the removal of 500 and 1,000 rupee notes from circulation in November. The policy has led to increased demand for digital payments.
This week, the company announced that its users would be able to add funds to their Paytm wallets using UPI, the interface that enables Indians to conduct digital transactions with a unique virtual identifier rather than using card or account details. And according to a report in Money Control last week, the company has said it wants to add 5 million merchants to its wallet in 2017.
The company said in a blog post that it currently has 2 million registered merchants on its wallet, after signing up the last 1 million in only 80 days, and grew from 122 million to 177 million wallet users last year.