Paytm's Vijay Shekhar Sharma has RBI nod for payment bank and he is planning it big. Here’s how

Paytm’s founder Vijay Shekhar Sharma is planning to dilute nearly 1% stake in One97 Communications Ltd, the holding company, to fund his payment bank operations.

Sharma, who received a payment bank licence from the Reserve Bank of India, has plans to begin operations by next financial year and has to own 51% of the payment bank.

As per the RBI mandate, the Indian promoter has to own 51% and the remaining can be owned by other corporate entities.

Sharma told ET he has plans to infuse between $25 million and $50 million of capital into the bank until operations become profitable.

"We will go to the market post-Diwali and tap current investors, banks as well as financial institutions for funding. The stake dilution will be less than 1%," said added.

Paytm is backed by China’s Alibaba Group as it pumped in $680 million in September, including others.

After this move, Sharma's stake is now 21% in the company, which is valued at about $3.4 billion.

Sharma also made initial estimates and said the Paytm Payment Bank Ltd would require Rs 150 crore to set up and EY and McKinsey have been roped in to prepare a blueprint.

In August, the central bank had given in-principle nod to 11 entities to run payment banks, including Reliance Industries, Airtel M Commerce Services, Vodafone m-pesa Ltd., etc.