The Reserve Bank of India (RBI) on Friday said it has advised National Payments Corporation of India (NPCI) to examine One97 Communication Limited’s request seeking approval for the Third-Party Application Provider (TPAP) route for continuation of Paytm’s Unified Payments Interface (UPI) services.
One97 Communication Limited is the parent firm of fintech major Paytm. On January 31, RBI issued a set of directions against Paytm Payments Bank, Paytm’s banking arm, citing ‘persistent non-compliances.’ These include a ban on adding new customers after February 29, a deadline which was later extended to March 15.
Following this, One97 began looking for partnerships with external banks to ensure continuation of Paytm’s UPI. The company has already partnered with Axis Bank to settle merchant payments, and is holding discussions with a few other lenders too.
If NPCI grants TPAP status, then, to avoid disruptions, ‘@paytm’ handles must be migrated from Paytm Payments Bank to a set of newly identified banks in a ‘seamless’ manner, RBI said.
Also, the third-party app must not add new users until the existing ones have been migrated ‘satisfactorily’ to the new handle, it added.
The central bank further stated that for seamless migration, NPCI can consider certifying up to five banks as ‘Payment Service Provider (PSP)’ Banks with ‘demonstrated capabilities to process high-volume UPI transactions.’