The National Payments Corporation of India (NPCI) has granted approval to Paytm to continue Unified Payments Interface (UPI) transactions through four banks, ensuring continuity for its users, despite regulatory actions against Paytm Payments Bank Ltd (PPBL).
The decision, announced on Thursday, allows Paytm to conduct UPI transactions through State Bank of India (SBI), Axis Bank, HDFC Bank, and YES Bank. This move comes just a day before the Reserve Bank of India's (RBI) March 15 deadline, which bars PPBL from accepting deposits, credit transactions, or top-ups in any customer accounts.
RBI had advised all PPBL customers to shift to other banks by March 15. PPBL, with approximately 30 crore wallets and 3 crore bank customers, faced regulatory actions due to persistent non-compliance and material supervisory concerns.
In a statement, NPCI said, "NPCI has today granted approval to One97 Communications Limited (OCL) to participate in UPI as a Third-Party Application Provider (TPAP) under multi-bank model." The four banks will serve as Payment System Provider (PSP) banks to OCL.
YES Bank will also serve as the merchant acquiring bank for existing and new UPI merchants for OCL, NPCI added.
Existing users and merchants will experience uninterrupted UPI transactions and autoPay mandates, as the '@Paytm' handle will be redirected to YES Bank, NPCI further stated.
OCL has been advised to complete the migration for all existing handles and mandates to new PSP banks promptly.
RBI Governor Shaktikanta Das reassured that 80-85 per cent of Paytm wallet users would not face disruption due to regulatory actions, while the remaining users were advised to link their apps to other banks.
The regulatory actions against PPBL began on January 31 when RBI directed it to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags, and other instruments after February 29. The deadline was later extended to March 15.
PPBL was also barred from onboarding new customers effective March 11.
In response to the regulatory actions, promoter Vijay Shekhar Sharma stepped down as part-time non-executive Chairman of Paytm Payments Bank Limited. The bank's board was reconstituted with the induction of former Central Bank of India chairman Srinivasan Sridhar, former Bank of Baroda Executive Director Ashok Kumar Garg, and two retired Indian Administrative Service (IAS) officers.
Meanwhile, the National Highways Authority of India (NHAI) advised Paytm FASTag users to obtain a new FASTag from another bank before March 15 to ensure smooth travel and avoid inconvenience at toll plazas.
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