Bangalore: Paytm Payments Bank is targeting to become the world’s largest digital bank with 500 million bank accounts and aims to turn into an integrated financial services company that offers everything from wealth management to share trading.

“We are unveiling our money market fund, launching our debit card and we’ll have the capabilities to allow enterprises to open business accounts," Paytm founder Vijay Shekhar Sharma said in a phone interview that coincided with Tuesday’s formal inauguration of its payments bank in New Delhi by India’s finance minister Arun Jaitley. “Digital payments was our entry point, we want to become a vertically-integrated financial services company."

The formal launch signals that the payments bank is now out of its beta mode and has many operational challenges sorted, he said.

Payments banks can accept deposits and remittances but cannot lend. Paytm is one of less than a dozen entities that got permits to start payments banks to bring financial services within easy reach of about a fifth of India’s 1.3 billion people who do not have access to organized financial services. The service is part of a key push by Narendra Modi’s government to broaden banking access to the unbanked and under-banked, mostly poor Indians who live in rural areas.

The service will be the country’s mobile-first bank with zero fee on online transactions and no minimum balance, according to a statement from the company.

Paytm Payments Bank is majority-owned by Sharma and One97 Communications, in which Alibaba Group Holding and Ant Financial collectively hold 49% stake. The payments bank morphed out of Paytm’s digital wallet which got a huge boost and amassed over a hundred million customers after India took its high currency bills, totaling nearly 90% of the value of cash, out of circulation last November.

Sharma may have found a way around the regulatory hurdles that bar lending. One97 Communications will introduce a charge card and offer monthly installment-based loans, he said. “We will launch share trading and insurance products very soon," said Sharma. “We want to become an Internet-age financial services company."

In India, the traditional banking system veers heavily toward those with wealth and the poorer citizens struggle to pay bills or transfer money to their relatives. “Buying insurance and investing through our wealth management products will become widely accessible through the payments bank," said Sharma.

Despite the proliferation of smartphones and cheap data rates bringing Internet access to millions, banks in the country are yet to build large digital banking capabilities. Indian consumers are not entirely comfortable with digital financial startups either. Sharma said both these could work in Paytm’s favour. “There are very few brands like ours that are trusted, and the winner will take all in this potentially very large market." Bloomberg

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