One97 Communications, the firm that owns Paytm, is restructuring its business ahead of the launch of its Payments Bank, merging the wallet business with payments bank operation.
“It is transfer of business. Wallet business will move to payments bank while One97 will be managing the sales part for the wallet business. The transfer will be complete once payment bank licence is obtained,” a Paytm spokesperson said.
The company had incorporated Paytm E-commerce and Paytm Payments Bank as separate companies earlier this year. Reserve Bank of India had awarded ‘in-principle’ approval to Vijay Shekhar Sharma, the founder of One97 Communications, to set up a Payments Bank.
Paytm Payments Bank is in the process of obtaining the final licence from the RBI and would commence its operations after obtaining due approvals, the spokesperson added.
Sharma will hold the majority share in the new Payments Bank entity, with the rest being held by One97 Communications. Alibaba Group and its affiliate Ant Financial pumped in $680 million into Paytm’s parent One97 Communications last year, taking its total shareholding to over 40 per cent in the country’s largest mobile wallet operator Paytm with close to 160 million customers. However, the Chinese entity will not have a direct shareholding in the payments bank.
Paytm has not given a fresh timeline for the launch of its payment bank services, which was earlier slated to begin operations around Diwali.
“We are working hard towards the launch of the payment bank and expect it to launch in due time. We are working with Fidelity, Infosys and Oracle to deploy a scalable platform that will be able to meet with the requirements of the bank when it launches. There are no timelines,” the spokesperson added.
With objective of deepening financial inclusion, RBI kicked off era of differentiated banking with SFB (small finance bank) and PB (payments bank), and 21 entities, including 11 for payments bank, were given in-principle nod last year.
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.
Last month, Airtel became the first payments bank to go live in the country when it rolled out a pilot of its banking services in Rajasthan. Replying to a query on its payments bank plans recently, Sharma (Paytm Founder) had admitted that the plans were “delayed”.
Post the government’s announcement of scrapping old Rs 500 and Rs 1,000 notes, Paytm has emerged as one of the main gainers as a huge number of people move towards digital currency. Wallet companies like Paytm and Mobikwik have registered spike in user base as well as the number of transactions.