Demonetisation: Paytm wallet will merge with coming payments bank

Founder and CEO of Paytm, Vijay Shekhar Sharma, interacts with media during the press conference in New Delhi on Wednesday (Photo: Dalip Kumar)
One97 Communications, which owns and operates Paytm, will transfer its digital wallet business to the newly incorporated Paytm Payments Bank, sources said. 

Paytm Payments Bank is in the process of obtaining the final licence from the Reserve Bank of India and would commence its operations after obtaining due approvals. Vijay Shekhar Sharma, the founder-CEO of One97, will hold the majority share in the payments bank. 

The company, which has missed the deadlines set by itself for the launch of its payments bank, is still several weeks away from the rollout. Paytm had wanted to be the first to start payments bank, but it was beaten by Airtel. 

In August this year, Paytm hived off its e-commerce and payments bank businesses into two separate companies, according to a filing with the Registrar of Companies. A separate e-commerce business will make a possible joint venture with Chinese major Alibaba easier to execute, analysts said. 

However, delinking banking operations is according to the regulatory norms prescribed by RBI. According to the filing, the company has been split into two separate entities, Paytm E-commerce Services and Paytm Payments Bank. Sharma is the director of both companies.

Sources close to the company said RBI wanted Paytm to ring-fence its payments bank and marketplace arm from the payments business. The company recently raised ~220 crore for its payments bank. “Around ~220 crore has been put into the bank, of which ~120 crore has come from my side,” Sharma said in an interview to Business Standard earlier. With 160 million customers already using its wallet, Paytm hopes to open as many as 200 million accounts within a year after the launch. It plans to have 500 million users by 2018.

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