Paytm Payments Bank has planned to start a Small Finance Bank (SFB). Sources related to the matter gave this information. He told that he can apply to RBI for the license around May-June this year. Actually, by then Paytm Payments Bank will complete five years. A payments bank can apply for a small finance bank only after he has completed five years.
The promoter of Paytm Payments Bank is Vijay Shekhar Sharma. Sources gave information about this plan on the condition of anonymity. Paytm has prepared a big plan for entry into the loan business. The source said that once the SFB license is granted, Paytm Payments Bank will discuss the loan business with the partners.
SFB is a separate segment of the banking industry. The SFBs segment was created by the RBI to bring a larger segment of the population into the ambit of banking services. SFBs provide banking services to the weaker section of the society. They also provide banking services to small business units. They also take deposits like commercial banks.
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Till now there is no case of payments bank applying for small finance bank license. Because of this, it may take some time to convert a payments bank into a small finance bank, the source said. This time could be up to a year. Payments bank can apply for small finance bank as per RBI rules.
As per the rules, a payments bank can apply for a small finance bank if it completes five years. However, joint ventures of different promoter groups are not allowed to start small finance banks.
Paytm Payments Bank commenced operations on May 23, 2017. It will be eligible to apply for the small finance bank license by May-June this year. Vijay Shekhar Sharma holds 51 per cent stake in Paytm Payments Bank. He is its chairman.
Analysts say Paytm Payments Bank can transform itself into a small finance bank and build a sustainable business model. Currently, Payments Bank is allowed to accept deposits up to Rs 2 lakh from a customer. But, they are not allowed to give loans.
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