After Airtel and India Post, Paytm launches its Paytm Payments Bank operation on Tuesday. The company wants to fuel the digitization drives and connect with 500 million customers by 2020. The company will open 31 branches and 3000 customer service point in the first year.
Commenting on the launch, Vijay Shekhar Sharma, Chairman of Paytm Payments Bank said, “The Reserve Bank of India (RBI) has given us an opportunity to create a new kind of banking model in the world. We are proud that our customer deposits will be safely invested in government bonds, and be used for nation building. None of our deposits will be converted into risky assets.”
Payments Bank division will be headed by Renu Satti who has been appointed as the CEO and was associated with the company from the last 11 years.
Further, the company plans to invest around Rs 400 crore to build its banking network over the next two years.
According to the company’s press statement, there will be no minimum balance required on the account and each online transaction (such as IMPS, NEFT and RTGS) will be free of charge. For savings accounts, the company would also offer interest at 4 percent per annum. The company is also offering current accounts to its millions of merchants.
Renu Satti, CEO of Paytm Payments Bank said, “Our ambition is to become India’s most trusted and consumer-friendly bank. Leveraging power of technology, we aim to become the preferred bank for 500 million Indians by 2020.”
The company has become the first payment bank that offers cashback on deposit. However, only first one million customers with a deposit of Rs 25,000 will get a cashback of Rs 250. Also, the 4% of interest rate is lower than Airtel and India post which is about 7.3% and 5.5% annually.
Other players such as Aditya Birla Nuvo, Cholamandalam Distribution Services, FINO PayTech, National Securities Depository, Reliance Industries, Sun Pharmaceuticals, Tech Mahindra and Vodafone M-Pesa are yet to launch their payments bank service.