Targeting 500 million customers by 2020, digital payments firm Paytm on Tuesday launched its payments bank with 4 percent interest rate and cashbacks on deposits, zero fees on online transactions and no minimum balance requirement.
"RBI has given us an opportunity to create a new kind of banking model in the world. 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 into risky assets," Paytm Payments Bank Chairman Vijay Shekhar Sharma said in a statement.
The company at present has around 220 million customers who use its digital wallet. The wallets will be shifted to the payments banks and users will have to comply with 'know your customer' (KYC) norms for opening accounts.
The company is setting up KYC centres across India to assist its customers in opening accounts.
"Our ambition is to become India's most trusted and consumer-friendly bank. Leveraging power of technology, we aim to become the preferred bank for 500 million Indians by 2020.
We will invest over Rs. 400 crores over the next two years to build banking network across the country," Paytm Payments Bank CEO Renu Satti said.
Paytm Payments Bank accounts will initially be available on an invite-only basis. In the first phase, the company willroll out its beta banking app for its employees and associates.
Paytm customers can request an invite through the Paytm Payments Bank website or the Paytm application on Apple's iOS platform.
"This will be a mobile-first product with first-of-its-kind feature of cashback on deposits. Every customer, to open a Payments Bank account, will get a cashback of Rs. 250 as soon they bring deposits of a total of Rs 25,000 in their bank account.
"The account will have zero balance requirement and every online transaction (such as IMPS, NEFT, RTGS) will be free of charge," the statement said.
For savings accounts, the company would offer an interest of 4 percent per annum. The company will also offer current accounts to its millions of merchants.
Paytm plans to roll out 31 branches and 3,000 customer service points of the bank in the first year.
Users will continue to be able to use their Paytm Wallet in the same manner as before, it added. Paytm will offer virtual RuPay debit cards to customers immediately and physical card on request for withdrawing cash from any ATM in the country.
Disclosure: Paytm's parent company One97 is an investor in NDTV's Gadgets 360.