The Reserve Bank of India (RBI) on Friday said Paytm’s Unified Payments Interface (UPI) handle, @paytm, would be smoothly migrated from Paytm Payments Bank to a set of newly identified banks to minimise disruptions after March 15.
The RBI has barred Paytm Payments Bank from accepting fresh credits in its customer accounts or mobile wallets after March 15. It has also ordered termination of nodal accounts of One 97 Communications Ltd (OCL) and Paytm Payments Services Ltd.
In the latest action, the RBI has advised the National Payments Corporation of India (NPCI) to consider the request of OCL, which owns the brand Paytm, to become a Third-Party Application Provider (TPAP) for continued UPI operation of the app.
“No new users are to be added by the said TPAP until the existing users are migrated satisfactorily to a new handle,” the RBI said.
As of January 2024, Paytm Payments Bank was the third-largest platform for UPI payments market share of around 15 per cent.
For seamless migration of @paytm handles to other banks, the NPCI may facilitate certification of four to five banks as payment service provider (PSP) banks with demonstrated capabilities to process high volume UPI transactions, the RBI said.
“This is in line with NPCI norms for minimising concentration risk,” it said.
Axis Bank, HDFC, and Yes Bank have jointly applied with Paytm to be a TPAP with NPCI, a person close to the development said. The person added that other lenders such as SBI and Canara are also involved in a similar discussion with the company.
A PSP bank, either through its own application or a TPAP, onboards and registers customers on UPI, linking customers’ bank accounts to their respective UPI identifications. A TPAP is a service provider that participates in UPI through a PSP bank, according to the NPCI. NPCI runs the UPI ecosystem in India.
For the merchants using Paytm QR codes, OCL may open the settlement accounts with one or more PSP banks other than Paytm Payments Bank, the regulator said.
The RBI reiterated that the customers, whose underlying account/wallet is currently with Paytm Payments Bank, are advised to make alternative arrangements with other banks well before March 15.
It said actions were undertaken in the sole interest of protecting the customers and payment system from any possible disruptions and are without any prejudice to the regulatory or supervisory actions initiated by the RBI against Paytm Payments Bank.
Last week, Paytm inked a pact with Axis Bank — the third largest private sector bank in the country — to transfer the nodal accounts. At least one more bank is likely to partner for the nodal accounts.
First Published: Feb 23 2024 | 11:35 PM IST
