India's Paytm raises $60 million as launch of its payments bank nears

India's Paytm has raised another round of funding as it nears the launch of its payments bank.

The latest investor in digital payments and ecommerce firm is Taiwan's semiconductor company MediaTek. Mashable India understands that MediaTek has invested $60 million in Paytm, valuing the Indian company at $5 billion. Paytm is in the process of closing another $240 million in investment from some of its existing shareholders including Alibaba, Ant Financial and SAIF Partners, according to a person familiar with the matter. Paytm said that it will use the fresh capital to expand and scale up its payments and commerce efforts, and also launch its proposed Paytm Payments Bank. “For Paytm, our mission is to bring half-a-billion Indians to the mainstream economy,” said Vijay Shekhar Sharma, founder and CEO of One97 Communications, the parent company of Paytm.

“India is ripe for its financial services revolution and with the growing penetration of smartphones, we have an opportunity to give a new business model of payment, banking and financial services combined with online commerce," he added.

Paytm was one of the 11 firms to receive payments bank license from the Indian government last year. Paytm Payments Bank, which is expected to launch later this year, will aim to drive small savings for people living in urban and semi-urban areas. Reliance Industries, Aditya Birla uivo, Vodafone and Airtel among others got the in-principle approval from the Reserve Bank of India to open a payments bank. Payments banks are meant to bring India's vast unbanked population into the banking fold, which would ensure more transparency in daily transactions. However, a user can only have deposit up to Rs 100,000 ($1,495) per account. Unlike conventional banks they cannot lend money to customers and cannot issue credit cards. They can, however, offer internet banking and debit cards. The government has expressed the need for these niche banks that could offer easier and swifter banking facilities. The investment from MediaTek is interesting also because it is a shareholder in Paytm's competitor MobiKwik.