Paytm Payments Bank to offer 4% interest, open 31 branches in first year
Paytm, which is starting its payments bank from Tuesday in Uttar Pradesh plans to open 31 branches and 3,000 customer service outposts within the first year of operations, the company said Monday. Led by its new CEO Renu Satti, Paytm's payments bank will offer an interest rate of 4% on deposits. To get the initial set of users on board it will give cash backs to the first one million account holders.
The company said in a prepared statement that accounts for Paytm Payments Bank will initially be available on an invite-only basis. Paytm will roll out the beta banking app for its employees and associates for now. Paytm customers can request for an invite on the bank's website or on the Paytm iOS app. The invite-only limitation will be applicable for the first six months.
As per the initial plan, Paytm is offering the lowest interest rates compared to its rival payments bank, Airtel at7.25% and India Post at 4.5-5.5%. " We believe we have a compelling value proposition for consumers,'" the company said when asked how it would attract users as rivals are offering higher interest rates.
"The RBI has given us an opportunity to create a new kind of banking model. 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 in to risky assets," said Vijay Sehkhar Sharma , chairman of Paytm Payments Bank. Sharma owns 51% in the payments bank while the rest is owned by Paytm's parent One97 Communications and its subsidiaries.
The Alibaba-backed company, which recently raised $1.4 billion from SoftBank, plans to bring half a billion users on its platform by 2020. The payments bank has already received Rs 218 crore in capital infusion and is expected to have start operations with Rs 400 crore as initial capital base. Paytm said it is setting up Know your customer (KYC) centers across India to complete the formalities for its customers and make them eligible for a Payments Bank account.
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