Digital payments and financial services company Paytm on Monday said Paytm Payments Bank's customers can now make instant payments through its payment gateway using balances available in their fixed deposit account held with its partner bank, IndusInd Bank.

Paytm Payments Bank enables its customers to open fixed deposits with partner IndusInd Bank.

"Paytm all-in-one payment gateway now allows fixed deposit (FD) balances to make payments on partnered platforms," Paytm said in a statement.

"This is in association with Paytm Payment Bank Ltd, whose account holders can now use their fixed deposits with IndusInd Bank to make instant payments across online platforms. The innovation will help customers manage their liquidity in real-time to make payments seamlessly," the firm added.

Customers with a Paytm Payment Bank account can redeem the FD from IndusInd Bank into Paytm Payments Bank account in real-time and use the money to make payments.

This partnership with Paytm Payments Gateway is for a first-of-its-kind solution to use fixed deposit balance as a payments source.

"This will make way for greater convenience for the user and will also help them to liquidate their balances to make real-time payments with ease," a Paytm Payments Bank spokesperson said.

As of 31 March 2021, total outstanding fixed deposits under the arrangement between Paytm Payments Bank and IndusInd bank stood at Rs 1,750 crore.

Paytm Payments Bank's customers will be levied no charges or penalties for premature liquidation of the FDs opened in association with IndusInd Bank.

"Product innovation is at the heart of our payment solutions and this is a great example. We are proud to be the first in the country to allow real-time redemption of fixed deposit balances into customer's current and savings accounts for making payments, which will promote wider acceptance of digital payments in the country," Paytm senior vice-president Praveen Sharma said in the statement.

As of 31 March 2021, Paytm Payments Banks had 6.4 crore savings accounts.