Vijay Shekhar Sharma, the founder and CEO of mobile wallet and e-commerce company Paytm, said on Monday the wallet business had moved to a new company, Paytm Payments Bank Ltd.
The Reserve Bank of India had issued a licence to Sharma last year to set up the payments bank, which can function like a bank but not accept deposits of more than R1 lakh in an account, nor give loans or credit cards.
“Finally, the Paytm wallet will be a perfect Indian product. The payments bank will have no foreign shareholder, and no foreigners on its board except an independent directors who has international citizenship,” Sharma told HT. “Alibaba will remain disconnected, through the structure of a holding company.”
Paytm has been arguably the biggest beneficiary of the government’s decision to crack down on the cash economy by banning the old R500 and R1,000 notes. The rise of electronic payments and transactions has made Paytm a household name to the extent it is becoming a generic verb for mobile wallet transactions.
As the company surged, tongues wagged that a Chinese-owned company benefiting from demonetisation would take away from the nationalistic rhetoric of demonetisation. China’s Alibaba Group, with its affiliate Ant Financial, owns more than 40% equity in One97, the holding company for Paytm’s ecommerce business and, thus far, for the mobile wallet.
Paytm Payments Bank has only two shareholders. Sharma, in his individual capacity, owns 51% equity, and One97 Communications owns 49%. Sharma has invested R112 crore of his own money in the payments bank and intends to invest another R100 crore.
With the wallet being transferred to the payments bank, Alibaba Group will not hold any share directly in it directly. It will only be a direct shareholder in One97, albeit a major one.