India’s leading digital wallet player Paytm has received the final licence from the Reserve Bank of India for its payments bank entity. With this, the road is now clear for the Noida-based payments player to kickstart its much awaited payments bank operations next week.
At the same time, Paytm has also announced that its long time executive and vice president Renu Satti will be the CEO of the payments bank. Satti has been Paytm's owner One 97 Communications for over a decade, most recently heading its movie ticketing business.
"We are in process of launching Paytm Payments Bank on 23rd May. We recently received approval from RBI for Renu Satti to be the CEO," said a Paytm spokesperson.
Paytm had earlier hired Shinjini Kumar, a former central banker and senior executive at consultancy PwC, as its CEO. It is not clear right now if Kumar has already left Paytm or is in another role.
Paytm Payments Bank Limited will begin its banking operations from May 23rd, 2017. As per the Central bank’s guidelines, the company will transfer its wallet business to the newly incorporated payments bank entity under a payments bank licence awarded to Founder and CEO Vijay Shekhar Sharma.
Customers using the payment wallet will see it move to the Paytm Payments Bank Limited in the same capacity and have the option of discontinuing their wallet services with due communication sent to the company by May 23rd.
The RBI allows payments banks to accept deposits from individuals and small businesses of up to Rs 1 lakh per account. With the objective of deepening financial inclusion, RBI kicked off an era of differentiated banking by allowing SFBs (small finance banks) and PBs (payments banks) to start services. A total of 21 entities were given in-principle nod last year, including 11 for payments banks.
Later, three entities -- Tech Mahindra, Cholamandalam Investment and Finance Company and a consortium of Dilip Shanghvi, IDFC Bank and Telenor Financial Services -- backed out of the payments bank licensing.
Sharma will hold the majority share in Paytm Payments Bank, with the rest being held by One97 Communications.
One97 Communications, the parent of Paytm, had restructured its business ahead of the launch of the Payments Bank in December 2016, merging the wallet business with payments bank operation. Alibaba which owns majority of the shareholding in the wallet operator will however not have a direct shareholding in the payments bank.
Sharma's One 97 Communications is also in talks to raise $1.4-1.9 billion from Japanese telecom and internet major Softbank Corp at a valuation of between $8-9 billion.