Paytm has decided to separate its wallet and digital retail businesses. The company said the e-wallet business will be transferred to newly incorporated Paytm Payments Bank Ltd. The company expect the new arm to be operational by early 2017.
The transfer will happen soon after the Paytm Payments Bank Ltd gets the requisite approvals. It got an in-principle payments bank licence from the RBI in 2015. The company said the accounts of existing customers will be transferred to the payments bank automatically once it starts functioning, reported NDTV. However, customers can opt out. Those who do not want their accounts to be transferred to the payments bank will have to write to the company before December 21, 2016.
Company founder Vjay Shekhar Sharma holds 51% stake in the new arm of the company. “The payments bank will not have any external shareholders and only Vijay is promoter and shareholder beyond One97 Communications Ltd,” the company told Mint. Paytm’s digital wallet is owned by One97 Communications.
One97 Communications has invested Rs 88 crore in the new arm, while Sharma has put in Rs 112 crore. Sharma said the initial investment in the payments bank could go up to Rs 400 crore.
Besides Paytm, the RBI gave the in-principle licence to Reliance Industries Ltd, Aditya Birla Nuvo Ltd, Bharti Airtel Ltd, Vodafone India Ltd and six other companies in August 2015. Of these, the Airtel Payments Bank was the first one to start operations in Rajasthan in November.
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