India’s largest digital wallet company Paytm started its payments bank operations on Tuesday becoming India’s third such firm to start operations. It will pay the lowest deposit rate among peers though. Paytm will pay an annual interest of 4 percent, Airtel Payments Bank offers 7.3 percent, while India Post pays up to 5.5 percent on deposits.
The company’s founder and Chief Executive Officer (CEO) Vijay Shekhar Sharma has a plan to counter the lower interest rate by offering more services. The payments bank wants to build on the wealth management business by collaborating with a domestic mutual fund house to offer a money market fund, said Sharma in an interview to Bloomberg.
The company has already sought approval from regulators to launch the product, Sharma added.
We believe it will be one of the best wealth management products for consumers because it will be so easy to get money in and money out and still get upwards of 6.5 to 7 percent yields.Vijay Shekhar Sharma, Founder And CEO, Paytm
Paytm can now accept deposits of up to Rs 1 lakh per customer in a savings or current account and offer other banking services like debit cards and online banking.
The payments bank will offer an instant cashback of Rs 250 for the first million customers opening an account and depositing Rs 25,000 in the savings or current account.
“Our merchant partners will also have access to current bank accounts. The payments bank will come with zero charges on online transactions and no minimum balance requirement,” the company said in a statement.
Branch Expansion
The first payments bank branch has opened in Noida and the company has plans of 31 new branches and 3,000 customer service points in its first year of operations.
Five ATM transactions in a month in non-metro cities will be free, post which customers will be charged Rs 20 per withdrawal. In metro cities, it has been capped at three.
Initial accounts will be by invitation only and the bank will roll out its beta application for employees and associates soon. Customers can also request an invite by putting in a request on the app or on the bank’s website.
In the past 48 hours, Paytm sent out messages to its users, asking them to open a payments bank account. However, it gave an option to those who do not wish to open an account have to only send an email and can continue to use the wallet as it is.
The company plans to open 500 million accounts by 2020.
(This article was originally published on BloombergQuint)
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