Paytm, the leading digital payments company in India, is reportedly looking to obtain a license to create a money market fund in which users can keep their cash and earn interest, reported the Economic Times.
The Economic Times reported Paytm aims to compete with Indian banks as the country moves away from cash. The digital payments company has applied with the central reserve bank in India to launch the fund and offer it to its more than 250 million customers.
The report noted Paytm is taking a page from Alibaba which already offers a fund via its payment arm.
The financial sector in India has been largely dominated by government-backed banks – similar to the financial system status in China – with the leading money market fund as state-owned and run by private banks such as the State Bank of India and ICICI Bank. The money market fund Paytm is considering will place leftover digital cash into a fund that accrues interest for account holders. The report did not specify the interest rate, but noted Paytm intends to compete with savings account rates offered by traditional banks.
In a recent Bloomberg interview, Paytm founder Vijay Shekhar Sharma said he plans to invest $1.6 billion in expanding the company’s wealth management, insurance and lending businesses over the next five years.
Paytm, which is owned by One97 Communications, received a $1.4 billion investment from SoftBank, the largest round from a single investor to an India-based startup to date. Paytm’s business has been booming since the government removed high denomination currency from the market last year to combat fraud and vowed to move the country toward a cashless society.
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