In a bid to take advantage of the mobile revolution to increase financial inclusion, India's government recently began inviting firms to apply for so-called 'payments bank' licences.

These new players, taking on traditional lenders, are able to take deposits of up to Rs 1 lakh, issue debit and ATM cards, and facilitate online transactions - but are not allowed to lend money.

In a blog, Paytm founder and CEO Vijay Shekhar Sharma says that the Reserve Bank of India has now given his firm permission to formally launch its payments bank and that he will take a "full-time executive role" in the venture.

"At Paytm Payments Bank, our aim is to build a new business model in banking industry, focussed on bringing financial services to 100’s of millions of un-served or underserved Indians. With power of technology and innovation-at-scale, we aim to become a benchmark in world of banking," he writes.

According to local press reports, a launch could be set for February, putting Paytm hot on the heels of telecoms giant Bharti Airtel, which launched the first payments bank in November, going live with a pilot across the state of Rajasthan.

Last August, Paytm parent company One97 Communications raised $60 million from Taiwanese chip manufacturer MediaTek, part way to a $300 million target to fund the firm's move into the banking sector.

The wallet firm - 40% owned by Chinese Web giant Alibaba - has also given Wipro a one year contract to help it build a core banking system that meets accounting and regulatory requirements including compliance with anti-money laundering rules.