India's Paytm raises $1.4 bln from SoftBank

Faith Castro
May 19, 2017

This investment comes at an infliction point for the digital payments behemoth, who is gearing up to make its much-awaited Paytm Payments Bank operational next week.

Satti replaces Shinjini Kumar, a former central banker and senior executive at consultancy PwC, who was named as Paytm Payments Bank CEO past year.

Paytm, which runs India's biggest digital payments system with more than 220 million users, said it planned to spend 100 billion rupees (RM6.5 billion) over the next three to five years to expand its services.

The payments bank would start its operations with Rs 400-crore initial capital and the first branch would be set up in Noida, UP. Paytm also has an e-commerce business, which, earlier this year, was spun off into a separate entity - Paytm E-commerce.

The funding will help Paytm expand its user base and build a suite of financial services products, the company said in a blog post.

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One97 Communications, the parent of Paytm, had restructured its business ahead of the launch of the Payments Bank in December 2016, merging the wallet business with payments bank operation. Kumar was appointed a senior executive at the Reserve bank of India before joining Paytm.

"We believe we have a great opportunity to bring financial inclusion to half a billion Indians", Sharma said following Softbank's investment by in his brainchild. But this Chinese entity won't be the direct shareholder of this Payment Bank service.

The payments banks will be allowed to accept deposits of up to Rs 1 lakh per account from individuals and small businesses, as per rules of RBI. The amount can be transferred to his/her bank account after the user provides the name of the account holder, account number and IFSC code.

In accordance with RBI guidelines, Paytm will transfer its mobile wallet operations to PPBL.

Even though PayTM is funded by Alibaba Group, they will not have any share holding in the Payments Bankas per the RBI regulations. It finally received its license to operate from the Reserve Bank of India this week, too. Post the government's announcement of scrapping old Rs 500 and Rs 1,000 notes in November previous year, Paytm has emerged as one of the main gainers as a huge number of people move towards digital currency.

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