One97 Communications, the parent company of Paytm had received permission from the Reserve Bank of India to formally launch the Paytm Payments Bank in January 2017. In December 2016, One97 Communications issued a public notice that it would be transferring its wallet business, to the newly-incorporated Payment Bank entity.
In 2014 budget, Finance Minister announced plans of putting a structure in place to allow differentiated banks serving niche interests, local area banks, payment banks etc. The Reserve Bank had received 41 applications for payments banks, of which 11 were granted an in-principle nod. Finally in August 2015, the Reserve Bank of India had granted payments bank licenses to these companies including Airtel, Paytm, Vodafone, Reliance Industries, Idea Cellular, FINO Paytech, India Post and National Securities Depository Limited received payments banks licenses.
Paytm was initially planning to launch the Payments Bank around Diwali last year, in November 2016, but Airtel beat Paytm to become the first payments bank in the country to go live. It launched the pilot of its Payments Bank Limited (“Airtel Bank”) in Rajasthan. Later in January 2017, Airtel finally began operations in 29 states.
The Indian fintech market is forecasted to touch USD 2.4 Bn by 2020. As a per a report by Google and Boston Consulting Group, released in July 2016, the digital payments industry in India is projected to reach USD 500 Bn by 2020, contributing 15% to India’s GDP.
Paytm cashed in on the Digital India drive, which is evident from street vendors to high end chains accepting payments via paytm. And not just Paytm, other ecommerce companies are also making the most of it. Amazon secured a licence from the RBI to operate a prepaid payment instrument (PPI). WhatsApp is expected to launch a peer-to-peer payment system in India, within the next six months. Truecaller, is going introducing a new UPI-based mobile payment service ‘Truecaller Pay’ through a tie-in with ICICI Bank.