Paytm is infusing Rs 350 crore in its payments bank arm, which is looking to start operations by Diwali this year, a company executive said. The capital will be primarily utilized to build the platform’s technology infrastructure and physical branch presence in rural areas, chief executive of Paytm’s payments bank Shinjini Kumar told TOI.
“Our plans show this initial capital is adequate for rolling out a payments bank as we are not looking to open too many branches in one go. We have got separate solutions to address urban and rural consumers as both have different sets of challenges,” Kumar said.
Paytm has already entered into an agreement with Infosys to use its Finacle platform for the payments bank. According to Kumar, the company is working on partnerships with financial service providers as it plans to sell financial products such as insurance and mutual funds to consumers of its payments bank.
Paytm’s payments bank launch has been delayed multiple times, but Kumar said a Diwali start is likely. For Paytm, selling the financial products would be critical and a key revenue steam as payments banks cannot lend money and earn interest on it. Leading industry players like Tech Mahindra, IDFC Bank and businessman Dilip Shanghvi dropped out of the race to open payments banks recently .
Sources in Paytm said that with internet connectivity not being the best in rural areas, the company plans to come up with an instrument similar to debit cards with which an account holder can withdraw cash at ATMs. A person aware of the plan said, “We can’t expect an overnight change in behavio ur in tier III or IV towns, especially when internet infrastructure still needs a lot of improvement. We are talking to banks and ATM providers to integrate the service for people to withdraw cash.”
Kumar said, “Paytm’s existing O2O (offline-to-online) footprint will be quite important for us as users can pay for their purchases using the payments bank’s money . This is why the company is aggressively adding offline merchants in these areas on our payments platform.”