SoftBank tests India's taste for foreign finance

Paytm to start payments bank from May 23 Renu Satti to be CEO

Paytm, India's largest digital payments startup, raised $1.4 billion from SoftBank Group Corp.in the largest funding round from a single investor for the country's technology sector.

- The bank is 51 percent-controlled by Vijay Shekhar Sharma, the founder and chief executive of One97, as per local rules that require majority control by an Indian national. Most recently, she was heading the movie ticketing business as vice president.

Even though PayTM is funded by Alibaba Group, they will not have any share holding in the Payments Bankas per the RBI regulations.

Paytm was scheduled to begin the payments bank operations in a year ago but failed to do so till now because of lack of regulatory requirements. Renu Satti, who is now a vice-president at Paytm, will head the payments bank operations.

Paytm was earlier slated to begin operations around Diwali previous year. Finally in August 2015, the Reserve Bank of India had granted payments bank licenses to these companies including Airtel, Paytm, Vodafone, Reliance Industries, Idea Cellular, FINO Paytech, India Post and National Securities Depository Limited received payments banks licenses.

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Under the payments bank licence, Paytm wallet users will be transferred to Paytm Payments Bank unless the user notifies otherwise.

Paytm said the investment will help it grow its leadership in the online payment system. Payments banks can issue services like ATM cards, debit cards, net-banking and mobile-banking; but they are barred from offering loans and credit cards. In case the wallet has been inactive with no activity in the last six months, the transfer to PPBL will only happen once the consumer gives specific consent.

RBI allows payments banks to accept deposits from individuals and small businesses of up to '1 lakh each. Alibaba (and its subsidiary) now holds over 40 percent stake in One97 Communications and have been adding to it by helping individual investors cash out from the company.

Paytm has been one of the prominent beneficiaries of the governments move to scrap high denomination notes.

Paytm's user base exploded past year when the government killed India's highest denominations in physical cash, sending millions scurrying toward mobile payments to get around a shortage of physical currency.

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