In a regulatory development, the Reserve Bank of India (RBI) has instructed the National Payments Corporation of India (NPCI) to explore the use of the Unified Payments Interface (UPI) channel, ensuring the continuation of Paytm App’s operations. The directive comes in the wake of RBI’s decision to bar Paytm Payments Bank from receiving further credits into its accounts and wallets after March 15, 2024.
RBI has urged NPCI to assess the feasibility of becoming a Third-Party Application Provider (TPAP) for the UPI operations of the Paytm app. The move aims to guarantee uninterrupted digital payments for UPI customers utilizing the ‘@paytm’ handle operated by Paytm Payments Bank. The request has been officially submitted by One97 Communication Ltd (OCL), the owner of the Paytm brand.
To facilitate a smooth transition of ‘@paytm’ handles to alternative banks, RBI has suggested that NPCI certify 4-5 banks as Payment Service Provider (PSP) Banks. These selected banks should demonstrate their capabilities in processing high-volume UPI transactions.
The regulatory action against Paytm stems from a Comprehensive System Audit report and subsequent compliance validation, revealing persistent non-compliances and ongoing supervisory concerns. The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are to be terminated promptly, according to the RBI order.
All pipeline transactions and nodal accounts related to transactions initiated on or before February 29, 2024, are mandated to be settled by March 15, 2024. Post this date, no further transactions will be permitted, as outlined in the regulatory order.
