India’s Paytm Payments Bank is weighing options to convert itself into a small finance bank as it seeks to expand its products and services portfolio.

Paytm Payments Bank is an affiliate of digital payments firm Paytm, which recently raised $2.46bn via India’s biggest-ever initial public offering (IPO).

The conversion is expected to solve several problems for Paytm, the Hindu Business Line reported citing Paytm founder and CEO Vijay Shekhar Sharma.

“A banking licence is an opportunity or decision which the regulator Reserve Bank of India gives to entities….so it would not be right on my part to comment on applying for a banking licence. But if we can become a small finance bank then we can solve a lot of payment problems and there are a lot of other things we can do,” Sharma was quoted by the publication as saying.

Notably, the fintech had disclosed its intention to convert in the draft red herring prospectus it filed with the Securities and Exchange Board of India (SEBI) before its IPO.

As per RBI’s guidelines, private players in the payment banking sector with a clean track record of five years can apply for conversion into SFB.

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Paytm Payments Bank got its licence from the central bank in 2017.

Sharma opines that a payment-led credit business offers a lot more scalability in comparison to a bank-based credit model because the former helps determine the creditworthiness of a customer.