Paytm, the leading online payment service provider in India, is now planning to merge its digital wallet service with its upcoming payments bank service. As per the report from ET, the step will be taken as soon as the payments bank service gets regulatory approval from RBI.
Confirming this development, Paytm’s spokesperson said to ET:
As per the directions of RBI, the company will transfer its wallet business to the newly-incorporated Paytm Payments Bank Limited (PPBL) after receipt of necessary approvals.
A few months ago, in August this year, One97 Communications, the parent company of Paytm had registered two new entities — Paytm E-Commerce Pvt. Ltd. and Paytm Payments Bank Ltd. Paytm’s marketplace business will now be operated as a seperate entity under Paytm E-Commerce.
It seems that the move to spin-off its commerce business into a new entity is taken to serve the platform as an entry-pad for Alibaba, the Chinese e-commerce giant, into the Indian market. Notably, the combined entity of Alibaba and its investment arm Ant Financials owns more than 40% stake in Paytm with over $680 million investment.
Reserve Bank of India has already granted an ‘in-principle payments bank licence’ to Vijay Shekhar Sharma, foudner of Paytm. He holds 51% share in the payments bank, with the balance owned by One97 Communications. Earlier, we reported that Sharma has invested about Rs 112 crore in payments bank business for his majority stake.
Paytm has been one of the leading gainers from the demonetisation of high-value currency in India. The company has registered a spike in its user base as well as in transactions. It claimed 5 million transactions per day and surpassed the average combined usage of credit and debit cards in India.
While Paytm is awaiting regulatory approval to launch its service, Airtel has already launched its Airtel Payments Bank as a pilot in Rajasthan. It claimed more than 10,000 savings account in just two days. Unlike traditional banks, it gives 7.5 percent interest on savings account.