The Reserve Bank of India (RBI) has directed the National Payments Corporation of India (NPCI) to review One97 Communication Ltd.’s (OCL) application to serve as a Third-Party Application Provider (TPAP) for the UPI platform to sustain the functioning of the Paytm app.
RBI has imposed restrictions on Paytm Payments Bank, preventing it from accepting further deposits into accounts and wallets after March 15, 2024. Paytm Payments Bank Limited (PPBL) was directed to halt transactions after February 29, following a directive issued on January 31.
Following the restrictions, earlier this month, One97 Communications has shifted Paytm’s nodal account to Axis Bank, ensuring continued operation of QR codes, Soundbox, and Card machines beyond March 15.
On Friday, Under Section 35A of the Banking Regulation Act, 1949, RBI has announced additional steps:
- Migration of ‘@paytm’ Handles: NPCI will assess OCL’s request to become a TPAP. If approved, ‘@paytm’ handles will seamlessly migrate from Paytm Payments Bank to new banks to prevent disruptions. No new users will be added until all existing ones are successfully migrated.
- Certification of PSP Banks: NPCI will certify 4-5 banks as Payment Service Provider (PSP) Banks to handle high volume UPI transactions, aligning with risk minimization norms.
- Merchant Settlement Accounts: OCL will open settlement accounts with PSP Banks for merchants using PayTM QR Codes.
Clarifications and Recommendations
Migration for ‘@Paytm’ Users Only: Only customers and merchants with ‘@Paytm’ UPI handles need to take action. Others are unaffected.
Alternative Arrangements: Customers with accounts/wallets at Paytm Payments Bank are advised to arrange alternatives with other banks before March 15, 2024, as advised in RBI’s FAQs released on February 16, 2024.
FASTag and NCMC Holders: Holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank should make alternative arrangements before March 15, 2024, to avoid inconvenience.
Yogesh Dayal, Chief General Manager at RBI, emphasizes that these actions are solely aimed at safeguarding customers and the payment system from potential disruptions, and they do not affect any ongoing regulatory actions against Paytm Payments Bank.