Paytm’s Payments Bank went live on Tuesday, offering 4% annual interest on saving accounts deposits. The first branch of the payments bank will be in Noida. The company plans to open 31 branches and 3,000 customer service points across the country in a year. They want to register 500 million customers by 2020.
On its first day, PayTM offered Rs 250 to all customers who transferred more than ₹25,000 into their Paytm Payments Bank accounts, and said this amount would be available up to four times. Accounts can be opened with a zero balance and all online transactions will be free of charge. The company will also issue debit cards in partnership with Rupay, and charge Rs 100 as an annual fee for them.
Customers can open an account by requesting an invitation on the website’s payments bank page or the Paytm iOS application. The company will also offer current accounts to all its existing online and offline merchants. Paytm is in the process of setting up Know Your Customer centres.
“The RBI [Reserve Bank of India] has given us an opportunity to create a new kind of banking model,” Vijay Shekhar Sharma, chairman, Paytm Payments Bank, said. “Our customer deposits will be invested in government bonds, and be used for nation building. None of our deposits will be converted in to risky assets,”
This is the third payments bank in the country, a new model set up by the RBI in 2015, which allows people to set up accounts that are limited to Rs 1 lakh. Payments banks do not offer loans or credit cards, but allow users to carry out basic transactions through debit cards or online banking. Of the other two currently in operation, Airtel’s payments bank offers 7.5% interest per annum and India Post 5.5%, reported Mint.