Banks interested in acquiring Paytm Payments Bank’s business would incur costs ranging from Rs 60-66 crore for conducting re-KYC processes for the bank’s merchant customers, according to bankers and industry experts. KYC, or Know Your Customer, is a procedure where financial institutions collect data and documents to verify a client’s identity, while re-KYC involves updating this information after the initial establishment of identity.
As of January 31, 2023, Paytm Payments Bank had approximately 60 lakh merchant customers, as per information available on the Paytm website. Bankers and industry experts stated that banks would conduct re-KYC to ensure compliance, with charges per customer ranging between Rs 90-110.
The decision for re-KYC comes following reported deficiencies in the initial KYC processes at Paytm Payments Bank, which led to regulatory actions against the bank. This process is typically carried out either by designated agents visiting merchant establishments or through digital means such as video KYC.
Public sector banks usually handle re-KYC internally, while private sector banks often enlist third-party entities for this purpose, incurring additional costs.
Given the regulatory restrictions imposed on Paytm Payments Bank by the RBI, effective after February 29, 2024, interested banks are expected to initiate the re-KYC process, which may take a few months due to the large customer base. However, not all merchant customers may need to undergo re-KYC, particularly those with a clean record, as highlighted by industry experts.
