RBI grants permission to Paytm for payments bank

After months of delay and speculation, the Reserve Bank of India (RBI) has granted Paytm, the country's largest digital payment service provider, permission to formally announce the launch of its Paytm Payments Bank.

The Reserve Bank of India has granted permission to payments banks to accept deposits from individuals and small businesses up to Rs1 lakh per account.

"Today, Reserve Bank of India gave permission to formally launch Paytm Payments Bank. We can't wait to bring it in front of you," Vijay Shekhar Sharma, founder of One97 Communications, said in a blogpost.

"No other role or responsibility means as much to me as the privilege of building Paytm Payments Bank, and I intend to take a full-time executive role in the Bank," Sharma said further.

He added that the aim was to build a new business model in banking industry, focused on bringing financial services to hundreds of millions of unserved or underserved Indians.

A PTI report quoting a Paytm spokesperson said the company hoped to launch operations in February with the first branch coming up in Noida, Uttar Pradesh.

Paytm was earlier expected to start operations around Diwali last year. The RBI had in 2015, given 'in-principle' approval to Vijay Shekhar Sharma, the founder of One97 Communications, to set up a Payments Bank along with 10 others.

With the aim 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 received in-principle nod last year, including 11 for payments banks.

''At Paytm Payments Bank, our aim is to build a new business model in banking industry, focused on bringing financial services to hundreds 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,'' said Sharma in a blog post.

The Payments Bank business of the company had received an investment of over Rs220 crore, nearly 50 per cent of which had been invested by Sharma. Thus, Sharma who has decided to lead the next financial revolution of the country, would now be the chief executive of the Payments Bank as well, according to the blog post.