Mumbai: Paytm, the digital wallet owned by One97 Communications Ltd, will be part of Paytm Payments Bank Ltd, in which Vijay Shekhar Sharma, founder of Paytm and recipient of a payments bank licence, holds a 51% stake.
“As per the directions of the Reserve Bank of India (RBI), the company would transfer its wallet business to the newly incorporated Paytm Payments Bank Ltd after receipt of necessary approvals,” the company said in a statement on Monday.
RBI had issued an in-principle payments bank licence to Sharma, chief executive of One97 Communications, last year. Paytm Payments Bank is in the process of obtaining the final licence from RBI to start operations.
Mint first reported in August 2015 that Sharma will separate the e-commerce and payments businesses by creating a new arm. The new unit will handle all of the firm’s payments businesses, including the Paytm wallet, while the e-commerce business will continue to remain under One97 Communications.
The company said Sharma will hold the majority share in Paytm Payments Bank. “The payments bank will not have any external shareholders and only Vijay is promoter and shareholder beyond One97 Communications Ltd. Our ownership structure is perfectly consistent since we filed the application for Payments Bank. It is 51% owned by Vijay and 49% by One97 Communications,” a company spokesperson said in an email.
One97 and Sharma have together invested Rs220 crore in Paytm Payments Bank to date, ahead of a planned launch in early 2017, Mint reported in November. Of the total amount, Sharma has invested Rs112 crore.
The initial investment could rise to as much as Rs400 crore and will be deployed in tranches, he said in an interview.
Sharma, who was looking to launch the payments bank in November, attributes the delay to the pending approvals from RBI.
The company has set a target of 200 million accounts, across current accounts, savings accounts and mobile wallets within 12 months of the launch. It aims to touch half a billion accounts by 2020. Paytm already has close to 150 million e-wallet users.
Mint had reported that One97 plans to sell products such as loans, insurance and wealth management to drive revenues. Payments banks are not allowed to lend themselves, but many are banking on cross-selling banking products through partnerships.
Apart from paying interest on the money parked in payments bank accounts, Paytm plans to charge merchants nothing when they transfer money from their current accounts to Paytm Payments Bank accounts. Sharma expects the payments bank to start making money in three to five years.
RBI gave in-principle payments bank licences to 11 recipients, including Reliance Industries Ltd, Aditya Birla Nuvo Ltd, Bharti Airtel Ltd and Vodafone India Ltd, in August 2015.
Airtel Payments Bank Ltd became the first to start operations, offering services in Rajasthan on a limited scale last month.