New Delhi: One97 Communications Ltd and its founder Vijay Shekhar Sharma, one of the 11 recipients of RBI’s payments bank licence, have together invested Rs220 crore in Paytm Payments Bank Ltd to date, ahead of a planned launch in early 2017.

Sharma said in an interview that he has invested Rs112 crore while the rest has come from One97.

The initial investment could go as high as Rs400 crore and will be deployed in tranches, added Sharma, who was looking to launch the payments bank in November.

The deferred launch has been largely attributed to pending approvals from the Reserve Bank of India. “There is a long process of getting all approvals and certification in place," said Sharma, adding that the process is in its last lap now.

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Sharma will hold a 51% stake in Paytm Payment Bank with One97 holding the rest.

The company has set a target of 200 million accounts, across current accounts, savings accounts, and mobile wallets, within 12 months of the launch. It aims to touch half a billion accounts by 2020.

Paytm already has close to 150 million electronic wallets.

One97 is betting on selling products such as loans, insurance and wealth management to drive revenues. Payments banks are not allowed to lend themselves, but many are banking on such cross-selling banking products through partnerships.

Apart from paying interest on the money parked in payments bank accounts, Paytm plans to charge merchants nothing when they transfer money from their current accounts to Paytm payments bank accounts. Sharma expects the payments bank to start making money in three to five years.

According to Sharma, the government’s demonetization exercise, which has forced several people and merchants to take the cashless route, has created opportunity to open more payment bank accounts.

While Paytm Payments Bank’s initial plans covers 12 cities in north-east and central India, it will also look at the western and southern regions, Sharma added.

On Wednesday, Bharti Airtel Ltd became the first payment bank to start operations by offering services in Rajasthan in a limited scale. Airtel announced an attractive interest rate of 7.25% on deposits in savings account, higher than the 4-6% offered by commercial banks.

Commenting on the move, Sharma said, “Paytm will not compete on interest rate but on wealth management."

In the last few months, several consortia that had won the payments bank licences, including Sun Pharma promoter Dilip Shanghvi and his partners IDFC Bank Ltd and Telenor Financial Services, and Cholamandalam Investment and Finance Co., and Tech Mahindra Ltd, withdrew their applications, citing concerns over the economics of payments banks in India.