Paytm Bank Allowed To Open New Accounts; But Losses Worth Rs 516 Crore Stares At Payments Banks
Paytm Payments Bank was barred from adding new account in June, 2018.
Finally, some good news for Paytm Payments Bank. Reserve Bank of India has removed the ban on their operations regarding new bank accounts.
However, Payments Bank in general across India are staring at mounting losses, which has almost doubled in 2018.
What exactly is happening here?
Paytm Payments Bank Allowed To Open New Accounts
Paytm founder Vijay Shekhar Sharma shared the good news, by tweeting full-page advertisements of Paytm Payments Bank, asking everyone to open an account there.
Happy new year from all of us @PaytmBank ! pic.twitter.com/hHadujtA1w
— Vijay Shekhar (@vijayshekhar) January 1, 2019
As per Paytm, their Payments Bank now has 42 million customers, and by the end of 2019, they aim to add 100 million bank customers.
Why Was Paytm Banned By RBI?
Back in July, Paytm Payments Bank was banned from adding new customers, and to open new bank accounts due to irregularities found by RBI.
Later, an RTI revealed the actual causes: Close proximity of Paytm founder Vijay Shekhar Sharma with the operations of Payments Bank, and violation of the rule that Rs 1 lakh can be the maximum amount in any account. Besides, KYC issue was also mentioned as one of the reasons, as they were using Aadhaar for the same.
As a result, then CEO Renu Satti was removed and ex-NPCI senior executive Satish Gupta was appointed as the Bank’s new CEO.
Besides Paytm Bank, Fino Payments Bank was also asked not to add new bank customers, for violating Payments Bank rules.
As per reports, Paytm will now ask all customers for an offline KYC, by visiting the nearest KYC point. More details are awaited.
But Payments Bank Are Incurring Huge Losses
Although Paytm’s Payments Bank has been allowed to open new bank accounts, Payments Banks, in general, are incurring huge losses.
In 2018, 6 operational Payments Banks incurred collective losses of Rs 516.5 crore, which is almost double of their losses in 2017, when they reported Rs 242.2 crore loss.
RBI has mentioned ‘high operational cost’ as the reason for this massive loss.
Paytm Payments Bank had reported a loss of Rs 20 crore, against revenues of Rs 720 crore in the financial year 2017-18.
The 6 operational Payments Bank right now are Aditya Birla Payments Bank, Airtel Payments Bank, India Post Payments Bank, Fino Payments Bank, Jio Payments Bank, and Paytm Payments Bank.
Do you use any Payments Bank? Do let us know your experiences by commenting right here!