Digital wallet company Paytm will launch its payments bank on May 23 as it has received the final licence from the Reserve Bank of India in this regard, the company said in a newspaper advertisement on Wednesday.
Paytm's long-time executive and vice president Renu Satti will lead the payments bank as its chief executive, Paytm confirmed in a blog post. Satti has been with parent company One97 Communications Ltd for over a decade now.
Last February, Paytm had appointed Shinjini Kumar, a former RBI executive and director at consultancy firm PricewaterhouseCoopers, to lead the payments bank initiative. It's not clear whether Kumar has quit the firm or moved to another role.
Email queries sent to Paytm did not elicit a response immediately.
To comply with RBI guidelines, Paytm will transfer its wallet business to the newly incorporated Paytm Payments Bank Ltd, the advertisement read. In August, the Noida-based company created two separate entities—Paytm E-Commerce Pvt. Ltd and Paytm Payments Bank Ltd—to run its e-commerce and banking services, respectively.
Paytm will move customers' wallets to their payments bank accounts. Users who want to opt out of the wallet can redeem the balance by a one-time transfer to their bank accounts, the ad read.
RBI rules allow payments banks to accept deposits of up to Rs 1 lakh per account from individuals and small businesses.
Paytm Payments Bank, which missed its original launch deadline, had been awaiting RBI's final licence. According to media reports, the banking regulator had some concerns around its ownership structure.
Sharma will hold a majority stake in Paytm Payments Bank as the licence was issued in his name. One97 Communications will hold the rest. The payments bank will not have any external shareholders.
Sharma and One97 Communications have together invested Rs 220 crore in the payments bank to date. Sharma has put in Rs 112 crore, according to media reports. For this, he also sold a 1% stake in the digital wallet’s parent firm One97 Communications to raise nearly $48.1 million (Rs 325 crore).
Paytm, which posted a loss of Rs 1,548 crore for the financial year ended March 2016 on revenues of Rs 830 crore, sees the payments bank as a “new revenue channel, and expects it to make money in two years’ time.”