The Reserve Bank of India ( RBI ) has issued a directive to the National Payments Corporation of India ( NPCI ) to thoroughly scrutinise the application filed by One97 Communication Ltd ( OCL ), the parent company of Paytm. This directive pertains to OCL’s request to operate as a Third-Party Application Provider ( TPAP ) for the Unified Payments Interface ( UPI ) channel.
Regarding the action against the Paytm Payments Banks Ltd ( PPBL ), the RBI is issuing necessary press releases for clarifications to the public. On 23rd February 2024, the RBI issued another press release related to the request of One97 Communication Ltd as Paytm UPI Third-Party Application Provider.
Also Read: Paytm Ban Supervisory, Not Detrimental to FinTech Ecosystem, says RBI
Effective March 15, 2024, Paytm Payments Bank will cease accepting further credits into customer accounts and wallets, prompting regulatory intervention to mitigate potential disruptions in UPI operations.
It has been further advised by the RBI that in the event of NPCI granting TPAP status to OCL, it may be stipulated that ‘@paytm’ handles are to be migrated in a seamless manner from Paytm Payments Bank to a set of newly identified banks to avoid any disruption. No new users are to be added by the said TPAP until all the existing users are migrated satisfactorily to a new handle.
To facilitate this transition, NPCI is encouraged to certify 4-5 banks as Payment Service Provider ( PSP ) Banks, capable of handling high-volume UPI transactions, in line with NPCI norms to minimize concentration risk in the UPI system.
For merchants utilizing PayTM QR Codes, OCL is advised to open settlement accounts with one or more PSP Banks, excluding Paytm Payments Bank, to diversify payment app providers and mitigate concentration risk.
It’s imperative to note that the migration of UPI handles is applicable exclusively to customers and merchants with a UPI handle ‘@Paytm.’ No action is required for those with UPI addresses or handles other than ‘@Paytm.’
Also read: RBI Extends Deadline to March 15th for Availing Credit Transactions and UPI Facility on PPBL
Customers with accounts or wallets held by Paytm Payments Bank are urged by the RBI to make alternative arrangements with other banks well in advance of the March 15, 2024 deadline. This aligns with guidelines provided by the RBI in FAQs released on February 16, 2024.
Additionally, holders of FASTag and National Common Mobility Cards ( NCMC ) issued by Paytm Payments Bank are advised to make alternative arrangements before March 15, 2024, to prevent any inconvenience.
“All the above actions are 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 RBI against Paytm Payments Bank” – stated RBI Press Release.
Read More: Clear your Doubts: RBI issues FAQs w.r.t Restrictions imposed on Paytm Payment Banks Ltd.
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