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Paytm Payments Bank

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Paytm Payments Bank
Company typePrivate company
IndustryFinancial services
Founded28 November 2017; 6 years ago (28 November 2017)[1]
FounderVijay Shekhar Sharma
HeadquartersNoida, India
Area served
India
Key people
Arun Kumar Bansal(CEO), Deependra Singh Rathore (CPTO) [2]
ProductsBanking
Owners
Websitewww.paytmbank.com

Paytm Payments Bank (PPBL) was an Indian payments bank, founded in 2017 and headquartered in Noida.[4] In the same year, it received the license to run a payments bank from the Reserve Bank of India and was launched in November 2017.[5][6][7] In 2021, the bank received a scheduled bank status from the RBI.[8][9]

Vijay Shekhar Sharma holds 51 percent in the entity with One97 Communications holding 49 percent. Vijay Shekhar Sharma is the promoter of Paytm Payments Bank, and One97 Communications Limited is not categorized as one of its promoters.[10][11] He resigned as part-time non-executive chairman and board member of Paytm Payments Bank, citing regulatory challenges with the Reserve Bank of India.[12][13]

On 31 January 2024, Paytm Payments Bank was stopped from onboarding new customers onto their platform, due to persistent non-compliance and continued material supervisory concerns within the bank. It was also told to not accept deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards after 15 March 2024.[14][15] The Reserve Bank of India has taken this step under Section 35A of the Banking Regulation Act, 1949. According to the RBI, this decision aims to address certain irregularities in Paytm Payments Bank's banking services, ensuring compliance with regulatory norms.[16]

History

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In 2015, Paytm Payments Bank Limited received in-principle approval from the Reserve Bank of India to set up a payments bank and was formally inaugurated on November 28, 2017.[7][17]

In the financial year 2020, the bank facilitated more than 485 crore transactions worth ₹4.6 lakh crore.[18] It processed over 778 million UPI transactions amounting to ₹89,388 crore in June 2022 [19] and continues to be India’s biggest UPI beneficiary bank [20] with over 1,370 million digital transactions in June 2022.[19][21]

In March 2021, the bank received approval from the Securities and Exchange Board of India for issuing payment mandates for initial public offerings (IPOs) through its "@paytm" UPI handle.[22][23]

After the RBI banned it from accepting deposits from 15 March 2024, it had to quickly migrate the handle to another company with a valid banking license. The handle was transferred to Yes Bank one day before the deadline to ensure existing users and merchants did not face any issues with their UPI transactions and AutoPay mandates.[24]

Products and services

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Paytm Payments Bank offers savings and current accounts with a debit card, facilitating fast and easy payments.[25] Paytm Payments Bank has issued seven million Visa debit cards through its platform in FY'21.[26]

Partnership

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In January 2018, Paytm Payments Bank partnered with IndusInd Bank to offer fixed deposits.[27] It entered into a partnership with MasterCard for the issuance of virtual and physical debit cards in April 2020.[28] In January 2021, it tied up with Suryoday Small Finance Bank to offer fixed deposit services to its account holders.[29] Since June 2021, it is not providing new fixed deposit creation with Suryodaya Bank.[30]

Financials

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Paytm Payments Bank reported a ₹19 crore profit for the financial year 2018-2019, making it the first payments bank in India to become profitable.[31] The company registered a profit of ₹29.8 crore for the financial year 2020.[32]

Regulatory issues

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In June 2018, the Reserve Bank of India barred Paytm Payment Bank from opening new customer accounts, following an audit by the Reserve Bank of India, which made some observations about the process the company follows in acquiring new customers and its adherence to KYC norms.[33][34] However, in January 2019, it received approval from the RBI to resume on-boarding new customers.[35] In October 2021, RBI imposed a fine of ₹1 crore[36] on the bank for violating laws pertaining to payments and settlement. On 11 March 2022, RBI prohibited PPBL from onboarding new customers owing to "certain material supervisory concerns observed in the bank".[37][38]

In continuation of these actions, and after the validation report of the external auditors revealed persistent non-compliance and continued material supervisory concerns in the bank, RBI ordered the bank to stop onboarding customers and not to accept deposits engaging in credit transactions, or making top-ups in customers accounts after 29 February 2024.[14] The prohibition order also includes not accepting additional deposits in prepaid instruments, wallets, FASTags, or National Common Mobility Cards.[39]

The deadline was extended to 15 March 2024 by a press release a week later.[40]

Awards and recognition

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  • In September 2021, Paytm Payments Bank was awarded the ASSOCHAM's FinTech & Digital Payments Award 2021 in the category of Excellence in Payments by the Associated Chambers of Commerce and Industry of India.[41]
  • It was awarded the ETBFSI Excellence Award under the category 'Best Digital Bank of the Year' by The Economic Times in 2020.[42]
  • It won the Finacle Client Innovation Award, 2020 for the category of Ecosystem-led Innovation by Infosys.[43]
  • In October 2019, Paytm Payments Bank received the Digital Payments Award for outstanding performance from the Government of India. The award was presented by Ravi Shankar Prasad, the Minister of Communication, Electronics & IT and Law & Justice, at the 2019 MeitY Start-up Summit.[44]
  • It won the Infosys Finacle Client Innovation Award under categories such as process innovation, innovative custom components and product innovation in 2019.[45]
  • It also won with Celent Model Bank 2019 Award.[46]
  • The company was awarded the RBI Asia Trailblazer Award by Retail Banker International in 2019.[47]
  • In 2018, the National Payments Corporation of India (NPCI) recognized the company with Excellent Award 2018 for excellent performance for High Acceptance of Rupay card for E-Comm Transaction & Excellent performance in Aadhaar Enabled Payment System (AePS).[48]

See also

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References

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  1. ^ "Arun Jaitley launches Paytm Payments Bank, vouches for digital payments". Business Today. November 28, 2017.
  2. ^ "Paytm Payments Bank appoints Rat as interim CEO". Business Standard. July 10, 2024.
  3. ^ "Why RBI lost patience with Paytm Payments Bank: Anti-money laundering lapses, related party transactions". Moneycontrol. 2 February 2024. Retrieved 2 February 2024.
  4. ^ "Paytm Payments Bank Launched: All About India's Mobile-First Bank With Zero Minimum Balance". India.com. November 29, 2017.
  5. ^ "Paytm Payments Bank launched. Here's how it compares to rivals Airtel, India Post". livemint.
  6. ^ "Paytm gets a green signal from the RBI to formally launch its 'Payments Bank'". The Economic Times. January 4, 2017.
  7. ^ a b "RBI gives licence for 11 payments banks". The Hindu Business Line. January 23, 2018.
  8. ^ "Paytm Payments Bank receives scheduled bank status from RBI". Business Standard.
  9. ^ Srivats, KR (January 9, 2018). "Arun Jaitley launches Paytm Payments Bank". The Hindu Business Line.
  10. ^ Shetty, Mayur (August 29, 2020). "Paytm seeks in-principle nod on small bank licence". The Times of India.
  11. ^ "One 97 Communication" (PDF). BSEIndia.
  12. ^ "Paytm's Vijay Shekhar Sharma steps down from payments bank board". The Times of India. 26 February 2024.
  13. ^ "Announcement under Regulation 30 (LODR)-Press Release / Media Release" (PDF). BSE Limited.
  14. ^ a b "Reserve Bank of India - Press Releases". www.rbi.org.in. Archived from the original on 2024-01-31. Retrieved 2024-01-31.
  15. ^ Livemint (2024-01-31). "RBI bars Paytm from accepting deposits in any customer account after 29 February". mint. Archived from the original on 2024-01-31. Retrieved 2024-01-31.
  16. ^ "Paytm Bank Faces Trouble as RBI imposes restrictions". 2024-02-01. Retrieved 2024-02-01.
  17. ^ "Paytm Payments Bank Formally Inaugrated [sic], To Invest $500 Mn In KYC". inc42.
  18. ^ "Paytm Payments Bank emerges as a success story of the banking model, registers profit for the 2nd consecutive year". Business Blog.
  19. ^ a b "UPI Ecosystem Statistics". npci.
  20. ^ "Paytm Payments Bank leads UPI beneficiary chart; SBI biggest remitter in December". Economic Times.
  21. ^ "Paytm Payments Bank processes 970 million digital transactions in March". Livemint. April 13, 2021.
  22. ^ "sebi approves paytm upi handle we now enable seamless applications for ipo". paytmbank.
  23. ^ "Paytm Payments Bank can now issue payment mandates for IPOs as SEBI approves UPI handle". Financial Express. March 15, 2021.
  24. ^ "NPCI grants approval to One97 Communications Limited (OCL) to participate in UPI as a Third-Party Application Provider (TPAP) under multi-bank model" (PDF). National Payments Corporation of India (NPCI). 2024-03-14. Archived (PDF) from the original on 2024-03-16. Retrieved 2024-03-16.
  25. ^ Motiani, Preeti (April 7, 2021). "Payments bank deposit limit hiked to Rs 2 lakh by RBI". The Economic Times.
  26. ^ "Paytm Payments Bank overachieved its target of issuing Visa debit cards at 7 million in FY21 as against goal of 1 million". Business Insider. March 1, 2022.
  27. ^ Anupam, Suprita (January 8, 2018). "Paytm Payments Bank Partners With IndusInd Bank To Offer Fixed Deposit". Inc42.
  28. ^ "Paytm Payments Bank partners with Mastercard". The Times of India. April 17, 2020.
  29. ^ "Paytm Bank account holders can now avail FD services from Suryoday Bank". Livemint. January 19, 2021.
  30. ^ @paytmbankcare (15 June 2021). "@KanhapskStonie Hi, We would like to inform you that we are not providing new FD creation with Suryodaya Bank. Rest…" (Tweet) – via Twitter.
  31. ^ Merwin, Radhika (September 10, 2019). "Why five out of the 11 payments banks have shut shop". The Hindu Business Line.
  32. ^ "Paytm Payments Bank posts net profit of ₹30 crore in FY20". The Hindu Business Line. June 9, 2020.
  33. ^ Raj, Amrit; Verma, Shrutika (August 1, 2018). "Paytm payments bank stops enrolling new users after RBI concerns". Hindustan Times.
  34. ^ "Paytm Payments Bank is still not allowed to add new customers, says CEO". Business Standard. August 25, 2019.
  35. ^ Bhakta, Pratik; Chanchani, Madhav (January 1, 2019). "RBI allows Paytm Bank to restart account opening t". The Economic Times.
  36. ^ "Reserve Bank of India - Press Releases". www.rbi.org.in. Retrieved 2022-03-14.
  37. ^ "RBI directs Paytm Payments Bank to stop onboarding new customers, orders IT audit". Moneycontrol. 11 March 2022. Retrieved 2022-03-14.
  38. ^ "Reserve Bank of India - Press Releases". rbi.org.in. Archived from the original on 2023-09-24. Retrieved 2024-01-31.
  39. ^ Mishra, Lalatendu (2024-01-31). "RBI curbs to render Paytm wallet and FASTag inoperative". The Hindu. ISSN 0971-751X. Retrieved 2024-02-01.
  40. ^ "Reserve Bank of India - Press Releases". rbi.org.in. 2024-02-16. Archived from the original on 2024-02-16. Retrieved 2024-02-16.
  41. ^ "ASSOCHAM Annual FinTech Digital Payments 2021". ASSOCHAM. September 8, 2021.
  42. ^ "ETBFSI Awards". Twitter.com. The Economic Times. December 4, 2020.
  43. ^ "Infosys Finacle Client Innovation Awards 2020 – Winner Announcements". EdgeVerve Systems. 2020.
  44. ^ "MeitY Start-up Summit, 2019". Paytm via Twitter. October 29, 2019.
  45. ^ "Winners of Infosys Finacle Client Innovation Awards 2019 Announced". Infosys. April 10, 2019.
  46. ^ "Paytm Payments Bank: Building a Truly Digital Bank". Celent.com. April 11, 2019.
  47. ^ "2019 winners – Retail Banker International Asia Trailblazer Awards". rbiasiatrailblazer.co.uk. 2019.
  48. ^ "Excellence Award 2018". npci.org.in. National Payments Corporation of India. 2018.
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Further reading

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