The Reserve Bank of India (RBI) on February 23 said it has advised National Payments Corporation of India (NPCI) to examine the request of One97 Communication Ltd (OCL) to become a Third-Party Application Provider (TPAP) for UPI channel for continued UPI operation of the Paytm app.
The central bank further advised that in the event of NPCI granting TPAP status to OCL, it may be stipulated that ‘@paytm’ handles are to be migrated in a seamless manner from Paytm Payments Bank to a set of newly identified banks to avoid any disruption.
“No new users are to be added by the said TPAP until all the existing users are migrated satisfactorily to a new handle,” RBI said.
For seamless migration of ‘@paytm’ handle to other banks, NPCI may facilitate certification of 4-5 banks as Payment Service Provider (PSP) Banks with demonstrated capabilities to process high volume UPI transactions, RBI said.
This is in line with NPCI norms for minimising concentration risk, RBI added.
Further, the release said merchants using PayTM QR Codes, OCL may open the settlement accounts with one or more PSP Banks (other than Paytm Payments Bank).
The migration of UPI handles is applicable only to customers and merchants who have a UPI handle ‘@Paytm’, and customers with other handles can continue and no action is required.
The central bank said actions are undertaken in the sole interest of protecting the customers and payment system from any possible disruptions and are without any prejudice to the regulatory or supervisory actions initiated by RBI against Paytm Payments Bank.
On January 31, the RBI imposed major business restrictions on PPBL, including a bar on accepting fresh deposits and doing credit transactions after February 29. On February 16, it extended the deadline to March 15.
The central bank said a comprehensive system audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and continued material supervisory concerns in the bank, warranting further supervisory action.
On March 11, 2022, the RBI barred Paytm Payments Bank from taking on new customers for the second time, saying that it had violated know-your-customer or KYC norms.
No further deposits or, credit transactions or top-ups are allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., after February 29, other than any interest, cashbacks or refunds that may be credited anytime, the RBI said.
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