India's One97 to split e-commerce, payments businesses - report
Indian mobile services One97 Communications will spin off its electronic payment service Paytm into a separate entity under One97's co-founder Shekhar Sharma.
Sharma told Livemint that the new unit, Paytm Payment Bank, will handle all of the existing company's payments business including the Paytm mobile wallet. One97's wallet license will be transferred to the new entity.
One97 will own less than 40% of Paytm, while Sharma will hold 51% of the company himself. This arrangement will allow compliance with regulations that require majority ownership by an Indian promoter. One97 is backed by Alibaba, which bought a 25% stake in the company earlier this year for $550 million.
The split was triggered by the conditional approval of Sharma for a payment bank license, which allows the company to offer interest-bearing accounts accepting a limited amount in deposits. One97 expects interest in Paytm's services to grow now that customers can earn interest on the money they deposit in the company's online wallet.
Several Indian online payment operators have applied for payment bank licenses, hoping that the added benefits they can offer will attract more customers. On August 19, the Reserve Bank of India issued conditional approval to 11 applicants in addition to Sharma, including mobile wallet operators Tech Mahindra and Airtel M Commerce Services. The companies now have 18 months to fulfill the requirements for final approval.
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