The Reserve Bank of India (RBI) asked the National Payments Corporation of India (NPCI) to consider One97 Communications’ request to become a Third-Party Application Provider (TPAP) for the Unified Payments Interface (UPI) channel.
The move is meant to enable continued operation of the Paytm app after RBI placed business restrictions on Paytm Payments Bank, RBI said in a Friday (Feb. 23) press release.
“As the Paytm Payments Bank 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 Paytm Payments Bank, and minimize concentration risk in the UPI system by having multiple payment app providers,” RBI said in the release.
NPCI is an umbrella organization for operating retail payments and settlement systems in India. Among the projects it oversees is UPI, a product in the country’s payment system that enables immediate money transfer through mobile devices, according to the organization’s website.
If NPCI grants TPAP status to One97 Communications, “@paytm” handles will be migrated from Paytm Payments Bank to other banks “to avoid any disruption,” according to the RBI press release.
To migrate those handles to other banks, NPCI can help certify four or five banks as payment service provider (PSP) banks that have demonstrated an ability to process high-volume UPI transactions, per the release.
“This is in line with NPCI norms for minimizing concentration risk,” RBI said in the release.
RBI said Jan. 31 that it had ordered Paytm Payments Bank to cease banking activities after Feb. 29, meaning the bank cannot take deposits, allow credit transactions, or permit top-ups on customer accounts, wallets, cards or prepaid instruments after that date.
The banking regulator said an audit uncovered compliance issues connected to the bank. It had ordered the bank to stop accepting new customers pending an audit in 2022.
Paytm expressed its intention to keep the digital wallet business operational by establishing new banking relationships.
“Your favorite app is working, will keep working beyond 29 February as usual,” Paytm CEO Vijay Shekhar Sharma said in a Feb. 1 post on X, formerly known as Twitter.
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