Digital payment player Paytm launched the Paytm Payments Bank and becomes the first bank to offer cash back on deposits. Paytm Payment Bank will be offering 4 percent interest rate and cash back on deposits, zero fees on online transactions and zero minimum balance. The company is targeting to acquire 500 million customers by 2020.
Vijay Shekhar Sharma, Chairman - Paytm Payments Bank said, "RBI has given us an opportunity to create a new kind of banking model in the world. We are proud that our customer deposits will be safely invested in government bonds, and be used for nation building. None of our deposits will be converted into risky assets".
Renu Satti, CEO - Paytm Payments Bank added, "We are very excited to launch Paytm Payments Bank and bring financial services to the unbanked segment of Indians. Our ambition is to become India's most trusted and consumer-friendly bank. Leveraging the power of technology, we aim to become the preferred bank for 500 million Indians by 2020".
However, the Paytm Payments Bank accounts will initially be available on an invite-only basis. In the first phase, the company will roll out its beta banking app for its employees and associates.
The company is also is setting up KYC centers across India to complete KYC for customers and make them eligible for a Payments Bank account and every customer to open a Payments Bank account will get a cashback of Rs. 250 as soon as they bring deposits of a total of Rs. 25,000 in their bank account. The account will have zero balance requirement and every online transaction (such as IMPS, NEFT, RTGS) will be free of charge.
Paytm plans to open 31 branches and 3,000 service points in the first year itself. and focussing on acquire 500 million customers by 2020.
Meanwhile, Paytm has recently raised funding of Rs. 1.4 billion from Softbank. This is the largest investment by the latter in a single company in India.
Paytm said that: "This investment will help us grow our leadership in the country's payment ecosystem, expand our user base and build a suite of financial services products for our customers."