Paytm Payments Bank has planned to start a Small Finance Bank (SFB). Sources related to the case 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 small finance bank only when it 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 to enter the loan business. The source said that after getting the SFB license, Paytm Payments Bank will talk about loan business with partners.
SFB is a separate segment of the banking industry. RBI had created the segment of SFB to bring a larger section of the population under the ambit of banking services. SFBs provide banking services to the weaker sections of the society. They also provide banking services to small business units. They also take deposits like commercial banks.
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So far there is no case of a payment bank applying for a small finance bank license. The source said that because of this it may take some time to convert the Payments Bank into a Small Finance Bank. This time can be up to one year. According to RBI rules, Payments Bank can apply for Small Finance Bank.
According to the rules, if a payments bank completes five years then it can apply for small finance bank. However, joint ventures between different promoter groups are not allowed to start a small finance bank.
Paytm Payments Bank began operations on May 23, 2017. It will be eligible to apply for a small finance bank license by May-June this year. Vijay Shekhar Sharma holds 51 percent stake in Paytm Payments Bank. He is its chairman.
Analysts say that Paytm Payments Bank can create a sustainable business model by transforming itself into a small finance bank. At present, Payments Bank is allowed to take deposits up to Rs 2 lakh from a customer. But, they are not allowed to give loans.