New Delhi: Mobile wallet Paytm, which became a household name after the Narendra Modi government's decision to scrap high denomination currency last year, has launched niche bank in a bid to double its customer base. Already 220 millon customers use Paytm, the target is expanding it to 500 million in the next three years.
The payments bank --- a bank that can take deposits and remittances but cannot lend -- will offer customers a high limit of Rs 1 lakh. The big draw is cashback of Rs 250 for every Rs 25,000 transferred to the bank. Paytm is also offering a 4 per cent interest to customers.
The payments bank will also offer debit cards, chequebook and demand drafts at a nominal fee. It will have no minimum balance requirements and all online transactions will be free, the company said in a statement. The Paytm accounts that are not zero balance or have been inoperative for six months will be automatically shifted.
Customers, however, can also opt out if they wish.
In the first year, the payments bank will open 31 branches and 3,000 customer points, the company said in a statement.
Initially, the bank accounts will be available only through invite. Paytm chairman Vijay Shekhar Sharma said the payments bank will invest its deposits in government bonds. "None of our deposits will be converted into risky assets," a statement from his office read.
Paytm's success since November last year, when PM Modi announced the demonetization, has attracted big investors such as Japan's SoftBank. Last week, SoftBank invested $1.4 billion in Paytm parent One97 Communications.
The company has also raised $200 million from China's Alibaba Group Holding and venture capital fund SAIF Partners. Alibaba and its associates are also the largest shareholders in One97 Communications.