Is Paytm Bank a cavity in the solid mission of Digital India? A bank is not for only rich people. More so when our prime minister Narendra Modi is talking about inclusivity. He says it is impossible for a country to have an overall growth if you don’t include all. Then how can we talk about an overall growth just by limiting a facility like banking only to the reach of rich of the country? What will you call a bank charging money for depositing money? Is it ethical from any angle? How can it aim to include all? Moreover, how can it work against what all other banks are doing? No other bank either physical or digital (Airtel Bank) charge commission for depositing money. Or for withdrawing. Then why only Paytm bank does it? And that too legally, right under the umbrella of Reserve Bank of India.
I don’t say Paytm is not good. On one hand, it is giving lucrative cash back on any transaction you do in terms of purchases and spendings like bill payments. Now, interestingly these offers obviously come from the product or service owners. Like, you get a cash back in purchasing a refrigerator of a good brand because Paytm gets benefits to offer that. Obviously, those benefits are higher than the cash back and other offers. Similarly, in services like bill payments, companies of various sectors like telecom, electricity, etc. pass on benefits to Paytm that it converts to cash back offers while keeping its profits intact. Otherwise, how despite heavy cash back offers, Paytm is a good profit making company growing at a substantial rate. But on the other hand, when it comes to Paytm Bank, all this love for consumers vanishes and scenario reverses altogether.
Photo credit: Shabdbeej on Visualhunt / CC BY-NC-SA
Why should People deposit money in Paytm Bank?
Vijay Shekhar Sharma, founder of Paytm holds 51% stake in Paytm Bank. 39% is with One97 Communications and rest 10% is held by a subsidiary of One97 Communications and Vijay Shekhar. That means the founder is still the major stakeholder in the bank. In the recent India Digital Summit 2018, where Vijay Shekhar Sharma was a speaker, I asked him why in his own home service that is Paytm Bank he is not offering any cashback. Rather why does he charge some %age on every transaction (deposit and withdrawal)? He said to stop people misusing it. Because from ATMs there is a per day limit of withdrawal and deposit. But then how and why a normal person with no intentions of money laundering or misusing it will ever use services of Paytm bank.
Does it mean Paytm bank is only for people safeguarding themselves from regular and normal legal procedures? Or Vijay Shekhar Sharma intends to make it an exclusive digital bank for a very few. Whatever it is, it might be a golden hen for Vijay Shekhar Sharma but not at all a bank for all citizens of India. Legally also, how a bank can exist in India driving a Digital India mission with full thrust where the bank charges the customer for every deposit and withdrawal? Is it violating Reserve Bank of India’s norms of banking? Or does it not come under Reserve Bank of India despite being a bank? Is it not a cavity in the strong wall of Digital India in the making?
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