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The Reserve Bank of India, handed out a first set of such permits a bit over a year ago with the intention to accelerate the adoption digital finance and expanding financial inclusion. Such banks aren’t allowed to lend money themselves, but can take deposits and provide other money transaction services. Bharti Airtel, the country’s largest wireless provider, was one of the winners of the permit, and launched its payments bank in November.
Paytm, India's largest mobile wallet provider, has received the final go ahead to start a payments bank in India. Its CFO, Madhur Deora, reveals what's coming next.
Q. Now that Paytm has the RBI’s final go ahead, what next?
We are planning to launch the bank in the next 30-60 days. We can’t wait to bring the Paytm Payments bank to millions of consumers across India.
Q. Why are Payments Banks important?
Payments Banks would introduce a new business model in the banking industry that is focussed on bringing financial services to hundreds of millions of Indians. We hope to democratise banking access and set a benchmark in the industry.
Q. What is the big picture here — what do you see happening in India that sets the scene for payments banks, specifically and what else in general?
With the power of technology and innovation-at-scale, we believe we can make a difference in the lives of hundreds of millions of Indians who currently do not have adequate banking services available to them. We will leverage the large number of smartphones in India, and our large network of use cases to make banking simple and convenient. We also see a great opportunity in bringing hundreds of millions of Indians into the mainstream financial economy, and believe that these fellow countrymen will massively adopt digital banking, when they see the benefits of financial inclusion.
Q. Some of those given permits by the RBI to start payments banks have already reportedly pulled out. What do you see as the biggest challenges in India that any payments bank will have to tackle?
We fully expect to face a number of execution challenges as we build the first-of-its-kind digital bank in India. However, we have full conviction in the journey that we have embarked upon, and are excited about bringing the Paytm Payments Bank to even more Indians.
Q. Payments banks, as envisioned in India, can’t make loans. Therefore, can you talk about how you see them evolve over say the next 3-5 years?
Our Payments Bank offerings will start with wallet accounts, current accounts and savings accounts. As we expand our user base, we will constantly innovate to make relevant and powerful financial inclusion products to our users.