Paytm to invest up to Rs.1500 cr for payment bank

Paytm to invest up to Rs.1500 cr for payment bank

Mobile commerce firm Paytm, which is backed by China’s Alibaba Group, plans to invest up to Rs.1,500 crore in the next two years for rolling out its payment bank services.

A new unit — Paytm Payment Bank Ltd. — will handle all of the company’s payments businesses, including wallet services, while the e-commerce business will remain under the parent firm, One97 Communications.

In an interview with The Hindu, Amit Lakhotia, Vice President (Payments) at Paytm said, “While as per RBI guidelines, the minimum paid-up equity capital for payments banks should be Rs.100 crore, from our point of view, the number will be higher…It would be anywhere between Rs.700 crore to Rs.1,500 crore to be invested over the period of next two years.” The funds will mainly be used to set up the new company, roll out services, migrate consumers from wallet to payment bank platform and for building the merchant infrastructure, Mr. Lakhotia added. 

The new entity will have a separate leadership team and plans are to hire about 2,000-2,500 people for the unit. The search for a chief executive officer to run the payments subsidiary is underway.

Last month, Paytm, along with 10 other entities, including Reliance Industries, India Post, Bharti Airtel and Vodafone, got the Reserve Bank’s nod to set up non-lending payments banks as part of the financial inclusion drive.

Mr. Lakhotia said the company is also exploring tie ups with multiple banks to expand services and the product portfolio.

Source :BankingUpdates.