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Paytm Payments Bank may apply for conversion into SFB

Paytm Payments Bank may consider applying for conversion into a small finance bank on completion of the required time period under law. When it becomes a small finance bank, it will be able to undertake additional banking activities such as lending. The plan is disclosed in the draft red herring prospectus filed by One 97 Communications (Paytm) with SEBI recently for the firm’s IPO. Under the existing RBI guidelines for ‘on tap’ licensing of small finance banks in private sector, existing payments banks with successful track record of at least 5 years can apply for conversion. An internal working group of the RBI had recently suggested that this period can be reduced to 3 years for considering the conversion. Paytm Payments Bank got its licence to operate as a payments bank from the RBI in 2017.

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