In case consumers do not wish to migrate, they have to inform Paytm, which will transfer the wallet balance to the consumer's bank account.
The public notice about the development was issued by Paytm and had updates for existing customers of Paytm.
In a move that has been in the works for months, One97 Communications, the parent company of Paytm has today taken to its blog to announce that Japanese telecom giant SoftBank has invested a staggering $1.4 billion into its fledgling digital payments business.
Paytm founder and CEO Vijay Shekhar Sharma said: "This investment by Softbank and support of the incredible entrepreneur Masa Son is a great endorsement of our team's execution and vision".
The RBI had come out with the first set of guidelines for payments in November 2014, along with the rationale.
At a time when India is stepping forward for Digital transaction, Paytm bank services will enable users to go ahead with more of digital money. "While normal banks target savings accounts and current accounts, we will target wallets as well", he had said.
Sharma and One97 Communications have together invested Rs220 crore in Paytm Payments Bank to date. They will have the option of discontinuing their wallet services with due communication sent to the company by May 23.
Paytm was earlier slated to begin operations around Diwali past year. The Reserve Bank had received 41 applications for payments banks, of which 11 were granted an in-principle nod.
With this, the road is now clear for the Noida-based payments player to kickstart its much-awaited payments bank operations next week. Aditya Birla Idea Payments Bank is expected to launch services soon. Alibaba and its affiliate Alipay now jointly hold about 45% in One97 Communications.
However, it needs to be kept in mind that the distribution business would eventually be dependent on how many of more than 200 million users that Paytm claims to have will convert their wallets into bank accounts with Paytm Payments Bank. Later in January 2017, Airtel finally began operations in 29 states.
With the objective of deepening financial inclusion, RBI kicked off an era of differentiated banking by allowing SFBs (small finance banks) and PBs (payments banks) to start services.