Paytm is soon to initiate its Payments Bank platform and the company has secured another Rs 218 crore (or $32.5 million) cash infusion just today. As per latest regulatory filings, the investment comes from Paytm CEO Vijay Shekhar Sharma, who is leading the same with a sum of Rs.111 crore. While the remaining investment of Rs.107 crore comes from One97 India Communications, the parent company for Paytm
Paytm plans to commence its payments bank service from Uttar Pradesh, this month itself. The company has already received permission from RBI and will combine the wallet business to the newly created payments bank so as to meet the bank’s guidelines. Moreover, Paytm Payments Bank issued 218 million shares to three shareholders for kicking off the business.
The company aims to build a new business model in the banking industry with its Payments Bank platform. The company targets to link most financial services to more than 100 million Indians. Further, the fresh capital will also be channelized for technology and expansion purposes. To achieve its target, the company will have to face a tough competition from existing platforms in the market including Airtel Payments Bank and India Post Payments Bank.
Vijay Shekhar Sharma, who also holds the payments bank licence sold off 1 percent of his personal holdings to Paytm’s parent firm One97 Communications earlier in December. The deal was struck at Rs. 325 crores, from which the fresh capital has been infused. Presently, the latter holds 51 percent stake in Paytm Payments Bank and will be supervising the operations.
Apart from the recent funding, Chinese e-commerce giant Alibaba is also considering to pump a massive $200 million funding into Paytm’s e-commerce entity. Alibaba, who’s one of the biggest stakeholders for Paytm is expected to announce the deal by the end of this month. This will enable Alibaba to compete against U.S-based Amazon and homegrown Flipkart.
The company has gone through numerous crests and troughs to achieve this milestone. The Payments Bank was initially scheduled to roll out sometime around Deepawali but Sharma didn’t kick off due to pending approval from RBI. With fresh investments and permissions in hand, the digital payments giant is all set to roll out its Payments Bank service. Thus, it most likely marks the end of delays and speculations surrounding Paytm’s Payments Bank platform.