Paytm, one of the most popular wallet services out there, today announced that it has been granted a Payments Bank license. The company announced that it could take 30-60 days for its Payments Bank service to be rolled out to customers. The company had applied for a Payments Bank license with the Reserve Bank of India last year.
Paytm’s Vijay Shekhar Sharma said on the official Paytm blog:
“Today, Reserve Bank of India gave permission to formally launch Paytm Payments Bank. We can’t wait to bring it in front of you.
At Paytm Payments Bank, our aim is to build a new business model in banking industry, focussed on bringing financial services to 100’s of millions of un-served or underserved Indians. With power of technology and innovation-at-scale, we aim to become a benchmark in world of banking.”
What is a Payments Bank?
Understandably, the first question in your mind would be what exactly is a Payments Bank.
To put it very simply, a Payments Bank is a bank which can accept restricted deposits up to Rs. 1,00,000. These limits can be increased further, but that depends on RBI’s further approval.
Payments Banks can also not issue loans and credit services. You can get a regular savings or current account with these banks. Additionally, Payments Banks can also issue ATM and Debit Cards. One of the motives of these banks is to promote mobile banking and internet banking – these services are also allowed to be undertaken.
To summarise, a Payments Bank will let you deposit up to Rs. 1 lakh per customer, give you ATM/Debit cards, allow mobile and internet banking. However, you cannot avail any loans or credit services.
What Does It Mean For Existing Paytm Users?
Paytm will give an option to existing Paytm Wallet users to convert their accounts to a Payments Bank Savings or Current account. For this purpose, you will have to furnish your identification and address proofs like Aadhaar, Voter ID card, PAN card etc.
Your existing Paytm wallet balance will be carried over to your new Paytm Payments Bank account, upon successful verification of your proofs.