The Reserve Bank of India (RBI) has directed the National Payments Corporation of India (NPCI) to carefully assess One97 Communication Limited’s application for approval under the Third-Party Application Provider (TPAP) route. This application pertains to the continuation of Paytm’s Unified Payments Interface (UPI) services.
One97 Communication Limited, the parent company of leading fintech player Paytm, has been under scrutiny since January 31 when the RBI issued a series of directives against Paytm Payments Bank. These directives were issued due to what the RBI termed as ‘persistent non-compliances.’ As a result, Paytm Payments Bank was instructed to halt the addition of new customers, initially set as of February 29 but later extended to March 15.
Facing these challenges, One97 Communication Limited has actively sought partnerships with external banks to ensure the seamless operation of Paytm’s UPI services. The company has already solidified a partnership with Axis Bank to facilitate merchant payments, and it is currently in discussions with several other banking institutions.
Should NPCI grant TPAP status to Paytm, the RBI has outlined specific conditions to prevent disruptions. It has mandated that ‘@paytm’ handles must transition from Paytm Payments Bank to the newly identified banks in a ‘seamless’ manner. Additionally, the third-party app will be restricted from adding new users until existing ones have been satisfactorily migrated to the new handles.
To facilitate this migration process, the central bank has suggested that NPCI consider certifying up to five banks as ‘Payment Service Provider (PSP) Banks’ with proven capabilities to handle high-volume UPI transactions.
