RBI consults NPCI, NETC, BBPS ahead of FAQs on Paytm to minimise consumer disruption

There will not be any extension of the deadline for banking services that PPBL can do beyond the current one, a banking executive said (Representative Image)

The Reserve Bank of India is in discussions with various organisations that run toll payments, mobile payments and bill payments, among others, to reduce customer inconvenience ahead of the frequently asked questions (FAQs) on Paytm that is expected to come out on February 14 evening or February 15, three different sources familiar with the matter told Moneycontrol.

NETC runs toll payments under FASTag, NPCI runs the popular mobile payments platform Unified Payments Interface (UPI) and BBPS runs bill payments. One 97 Communications, which owns the Paytm brand, was using Paytm Payments Bank Limited (PPBL) as the sponsor bank and was also maintaining the nodal accounts for these instruments.

"The discussions with these organisations are to understand how to help customers seamlessly move to other banks or to transfer balance amount. In cases where the balance cannot be withdrawn, how do we enable the migration of accounts? There has also been discussion on how not to disrupt UPI payments," said a senior banking executive aware of the discussions.

However, the executive added that there will not be any extension of the deadline for banking services that PPBL can do beyond the current one. While banks expect RBI to offer indemnity for any KYC-related issues emanating from taking over PPBL accounts, the executive said that FAQs would not comment on banks taking business calls to work with PPBL. "There is no indemnity coming up for banks. Whoever takes over the accounts will have to figure out the KYC issues," the source added.

Meanwhile, Paytm has been in discussions with Yes Bank, Axis Bank, Canara Bank, ICICI Bank, HDFC Bank and SBI for being the PSP (payment service provider) bank for creating new UPI handles for Paytm customers. The PSP banks connect third-party application providers (TPAP)--like Google Pay, PhonePe or Paytm -- with the UPI system. Until now, PPBL was the sole PSP bank for Paytm.

"The banks are waiting for the RBI FAQs before signing the partnership with Paytm. There need to be more details on migration and transfer of assets," said a second source aware of the matter. RBI's clarification will determine how onerous the task of migrating more than 90 million customers who use Paytm for UPI.

A third banking source said that there is no clarity on what happens to the data of existing UPI customers of Paytm as PPBL is the PSP bank and is supposed to be the custodian of data. Without giving the new bank access to the data at PPBL, the customers will lose most of the transaction history and other data on Paytm. They will also likely to be forced to sign up as new customers of Paytm.

"RBI can likely give transition time to the other PSP bank without extending the deadline. Losing past data on the app can also be considered as a disruption and my guess is that RBI will help customers find a way to keep their data even when Paytm changes the PSP bank," said the second source quoted above.