Soon after launching its payments bank, digital wallet firm Paytm has applied for a licence with the Reserve Bank of India to set up a money market mutual fund, a Bloomberg report said citing a person aware of the development.
The Noida-based company has sought to start an open-ended mutual fund that invests in short-term debt securities, which will allow its users to store money and earn interest. It is not known what the interest rate will be, but it is expected to be higher than that offered by regular savings accounts, the report added.
It is also not clear if the SoftBank- and Alibaba-backed company will offer the instrument through its payments bank or Paytm Financial Services, a unit floated in March to sell financial products like insurance and mutual funds to payments bank users.
Paytm Payments Bank can accept deposits of up to Rs 1 lakh from a customer but cannot lend money. Payments banks cannot offer financial products of their own and have to partner scheduled commercial banks to do so.
Paytm recently launched its Digital Gold programme, which allows users to buy, store, and sell the yellow metal on their smartphones.
In one of the largest funding rounds from a single investor in India, Paytm raised $1.4 billion (about Rs 9,000 crore) from Japan’s SoftBank Group Corp last month, and said it would use the capital to expand its user base and build a suite of financial services products.
Vijay Shekhar Sharma holds 51% stake in Paytm Payments Bank as the licence was issued in his name while One97 Communications holds the rest.