As Paytm becomes a bank, what happens to the money in the wallet?
- PNB fraud: Nirav Modi firms in Surat SEZ diverted duty-free diamonds
- Donald Trump speaks with Vladimir Putin after re-election victory in Russia
- Raymond to raise Rs100 crore via NCDs
- Privatisation of public sector banks in taxpayers interest: Nandan Nilekani
- EESL acquires UK-based utility Edina for Rs493 crore
Mumbai: Over the next five days, the money in 160 million Paytm wallets will show up in a corresponding number of Paytm Payment Bank wallets as the wallet company becomes a payments bank.
As news of the change emerged, some social media chatter created panic amongst Paytm users who thought they would lose the amount in their accounts. Paytm has scotched these rumours.
What will happen to the money?
It will simply be transferred to Paytm Payments Bank Ltd on 15 January. This means existing wallets will move from One97 Communication Ltd (the company currently behind Paytm) to Paytm Payments Bank Ltd. This change does nothing to the money in the wallets. Nothing changes, notes the company. If a person has a balance of Rs2,000 in her current Paytm wallet, the same will reflect in her new Paytm Payments Bank wallet. Wallets that have been inactive for six months and have zero balance won’t be transferred to the Paytm Payments Bank wallet unless their holders specifically consent to the same while logging into the app, web or by e-mail.
This doesn’t mean people with a Paytm wallet need to open an account with the bank to continue to use the wallet. In a 6 December 2016 notification, Paytm said that as per Reserve Bank of India guidelines, its wallet would be transferred to the newly incorporated Paytm Payments Bank. “Your Paytm wallet will work as it is, even after 15 January. Log in details, wallet balance and user experience will remain the same. Your Paytm wallet experience will remain the same for all current use cases such as paying at stores, paying for Uber rides, ticketing, fuel, etc,” the company said on its website.
Nor does it mean people with a Paytm wallet will automatically get an account with the new bank. “Once we launch the bank, you will be given an option to open a separate bank account with us,” Paytm said in the notification.
Anyone wishing to open an account will have to go through the mandatory know your customer (KYC) compliance that involves documentation such as Aadhaar and permanent account number (PAN). Only money in the bank account will earn interest, not that in the wallet.
Airtel Payments Bank, a competitor of Paytm Payments Bank, currently offers 7.25% per annum on savings accounts. Paytm has not yet announced interest rates on deposits. Paytm didn’t respond to repeated calls and messages and all information has been taken from public disclosures made by Paytm.