In its latest order, the Reserve Bank of India (RBI) asked the National Payments Corporation of India (NPCI) to examine the possibility of migrating Paytm Payments Bank Limited (PPBL) customers using the UPI handle ‘@paytm’ to 4-5 other banks, in order to prevent any disruptions in the payment ecosystem.
On Friday, the central bank came out with additional steps for the benefit of customers, wallet holders and merchants who are availing banking services from Paytm Payments Bank, which has been barred from accepting deposits and credits after March 15, 2024.
‘’As PPBL cannot accept further credits into its customer accounts and wallets after March 15, 2024, certain additional steps have become necessary to ensure seamless digital payments by UPI customers using ‘@paytm’ handle operated by the bank, and minimise concentration risk in the UPI system by having multiple payment app providers, said the RBI said in a statement.
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. Payments Bank PPBL has 30 crore wallets and 3 crore bank customers.
Here’s what RBI advices Paytm Payment Bank customers:
“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. To keep Paytm QR codes running, the company may open settlement accounts with one or more banks, according to RBI. 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,” said RBI.
Also, for the merchants using PayTM QR Codes, OCL may open the settlement accounts with one or more PSP Banks (other than Paytm Payments Bank), said the central bank. It added that the migration of UPI handles is applicable only to such customers and merchants who have a UPI handle ‘@Paytm’.
For others who have a UPI address or handle other than ‘@Paytm’, no action is required to be taken by them. RBI also asked the customers, whose underlying account/ wallet is currently with Paytm Payments Bank, to make an alternative arrangement with other banks well before March 15, 2024.
It further said that the holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank, may make alternative arrangements before March 15, 2024, to avoid any inconvenience.
“All the … 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,” said the central bank.
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.
RBI action against Paytm
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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