RBI Asks NPCI To Ensure An Alternative For Paytm Payments Bank UPI Users
Owing to several regulatory lapses, the central bank had put stringent restrictions on Paytm Payments Bank on Jan. 31.
The Reserve Bank of India has directed the National Payments Corp. of India to ensure alternative arrangements for customers using the Unified Payments Interface of Paytm Payments Bank Ltd., according to a press release on Friday.
NPCI has been asked to examine the request of the parent company One97 Communications Ltd. to become a third-party application provider for its UPI channel.
Further, the central bank has asked NPCI to migrate the accounts using @paytm handles to "a set of newly identified banks" to avoid disruptions, in case the NPCI grants a third-party application provider licence for UPI channel to Paytm.
NPCI may facilitate certification of 4-5 banks as the payment service provider, that are capable of processing high volume of UPI transactions.
Owing to several regulatory lapses, the central bank put stringent restrictions on Paytm Payments Bank on Jan. 31. The payments bank cannot accept further credits into its customer accounts and wallets after March 15.
These additional steps are aimed at ensuring seamless digital payment services by UPI customers using @paytm handles operated by the Paytm Payments Bank and to "minimise concentration risk" in the UPI system by having multiple payment app providers, the release said.
For the merchants who are using Paytm QR Codes, the parent One97 Communications Ltd. may open the settlement accounts with one or more banks, barring Paytm Payments Bank, the central bank said.
"No new users are to be added by Paytm until all the existing users are migrated satisfactorily to a new handle," the RBI said.
Moreover, the central bank clarified that the migration of UPI handles is applicable only to customers and merchants using the virtual payment address @paytm. For others, no action is required.
Similarly, customers who have an underlying account or wallet with Paytm Payments Bank should make alternative arrangement with other banks before March 15. The same is advised for FASTag holders and National Common Mobility cards issued by Paytm Payments Bank.
