NPCI asked to help Paytm continue ops

The Reserve Bank has directed the National Payments Corporation of India (NPCI) to explore the feasibility of transferring Paytm Payments Bank customers using the UPI handle ‘@paytm’ to 4-5 other banks, aiming to maintain stability in the payment ecosystem.

This move follows additional measures announced by the central bank on Friday for the benefit of customers, wallet holders, and merchants of Paytm Payments Bank, which will cease accepting deposits and credits after March 15, 2024.

As per the website of Paytm Payments Bank (PPBL), it has 30 crore wallets and 3 crore bank customers.

NPCI, an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of RBI and Indian Banks’ Association (IBA) for creating a payment and settlement infrastructure in India.

NPCI has been tasked with evaluating One97 Communication Ltd’s (OCL) request to become a Third-Party Application Provider (TPAP) for UPI operations, subject to regulatory norms.

One97 Communications Ltd (OCL), which owns the Paytm brand, holds a 49 per cent stake in PPBL.

RBI further said 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 PPBL 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,” it added.

“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,” RBI said.

Furthermore, for merchants using PayTM QR Codes, OCL may establish settlement accounts with other PSP Banks.

The migration of UPI handles applies exclusively to customers and merchants with ‘@paytm’ UPI handles. RBI advises such users to arrange alternative banking arrangements well ahead of March 15, 2024.

Customers holding FASTag and National Common Mobility Cards (NCMC) issued by PPBL are urged to make alternative arrangements before the specified date to avoid inconvenience. These measures, undertaken in the interest of customer protection and payment system stability, are separate from regulatory actions initiated by RBI against Paytm Payments Bank. Since March 2022, PPBL has been prohibited from onboarding new customers.