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Business News/ Companies / News/  RBI directs NPCI to examine Paytm's request for being third-party app for UPI
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RBI directs NPCI to examine Paytm's request for being third-party app for UPI

According to the RBI, the directive has been issued to ensure seamless digital payments by UPI customers using ‘@paytm’ handle (operated by the Paytm Payments Bank) and minimise concentration risk in the UPI system.

Paytm was also asked to remove Renu Satti as chief executive of Paytm Payments Bank following objections about her ability to lead a banking services firm. Photo: MintPremium
Paytm was also asked to remove Renu Satti as chief executive of Paytm Payments Bank following objections about her ability to lead a banking services firm. Photo: Mint

The Reserve Bank of India (RBI) advised the National Payments Corporation of India (NPCI) on Friday, February 23, to examine Paytm’s request to become a third-party application provider for unified payments interface (UPI) payments. The central bank has barred Paytm Payments Bank Limited (PPBL) from accepting further credits into its customer accounts and wallets after March 15, 2024.

“NPCI has been advised by the RBI to examine the request of One97 Communication (OCL) to become a third-party application provider (TPAP) for UPI channel for continued UPI operation of the Paytm app, as per the norms," said the central bank said in its statement. OCL, which owns the Paytm brand, holds a 49 per cent stake in PPBL.

Also Read: What to do if you have a Paytm UPI handle? RBI advises this

If approved, this would allow Paytm to continue processing payments via UPI, but will need a set of newly identified banks to back the app. The NPCI should facilitate four to five banks, with an ability to process high volumes of UPI payments, to act as service providers to Paytm, the RBI said of Friday.

According to the RBI, the directive has been issued to ensure seamless digital payments by UPI customers using ‘@paytm’ handle (operated by the Paytm Payments Bank) and minimise concentration risk in the UPI system.

“No new users are to be added by the said TPAP until all the existing users are migrated satisfactorily to a new handle," said the RBI. The central bank came out with additional steps on Friday for the benefit of customers, wallet holders and merchants who are availing banking services from PPBL.

To keep Paytm QR codes running, the company may open settlement accounts with one or more banks, according to the central bank. "For seamless migration of ‘@paytm’ handle to other banks, NPCI may facilitate certification of 4-5 banks as Payment Service Provider (PSP) Banks with demonstrated capabilities to process high volume UPI transactions. This is in line with NPCI norms for minimising concentration risk," said RBI.

Also Read: ‘Don't fall for any rumour’: Paytm QR, Soundbox and EDC to work even after March 15, claims Vijay Shekhar Sharma

Paytm is the third largest app for UPI payments in the country, processing 1.6 billion monthly transactions, according to data available on the NPCI website. PhonePe and Google Pay are the two largest.

Last week, Paytm said it had signed on Axis Bank to act as a banking partner. On January 31, the central bank had imposed operational restrictions on PPBL due to non-compliance issues and significant supervisory concerns. On February 16, RBI decided to grant an additional 15 days until March 15, 2024, for PPBL to halt deposits, credit transactions, or top-ups in any customer accounts, wallets, and FASTags.

 

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Published: 23 Feb 2024, 04:38 PM IST
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