Paytm is on an expansion spree following its decision to convert its e-wallet into a payments bank sometime back. As part of its ambitious plans to open 100, 000 branches across the country, it is recruiting 10, 000 agents to man the mini-branch like setups for fulfilling the KYC norms as mandated by the RBI. The target the company has set for itself is 500 million KYC-compliant customers in three years’ time.

The latest move follows guidelines issued by the Reserve Bank of India that prepaid payment instruments (PPI) licence holders will also have to follow the KYC route and obtain the necessary proofs from their customers. There are other regulations also put in place for this category, putting them at some kind of disadvantage. With these instructions, Paytm is virtually doubling its head count in terms of the agents, adding 10, 000 more to the already existing 10, 000.

The way the physical KYC will work is for the customers to walk into Paytm’s nearest branch and do the biometric verification, on the lines the mobile phone operators have been doing over the past several months.

In all this, the standalone e-wallet service providers have been thrown into a big disadvantage, since they will also have to follow the same KYC norms as the payments bank, but they cannot pay any interest on their customers’ e-wallet balances, whereas the payments banks are allowed to pay 4% interest.

Another factor pointed out as going in favour of the payments bank cum e-wallet operators like Paytm is that they can permit seamless and free transfer of funds from the customers’ accounts to the e-wallet, whereas the standalone operators will have to bear the charges levied by the banks in the form of merchant discount rates (MDR).