The National Payments Corporation of India (NPCI) on Thursday granted approval to Paytm-owner One97 Communications Ltd to participate in UPI as a Third-Party Application Provider (TPAP) under the multi-bank model.
This development came just a day ahead of the Reserve Bank of India (RBI) deadline asking customers and merchants of Paytm Payments Bank Ltd (PPBL) to shift their accounts to other banks by March 15.
What does this new approval mean?
This new license would permit Paytm to continue with their Unified Payments Interface (UPI) services to its users through the application even after its banking unit Paytm Payment bank Limited (PPBL) stops operations after March 15.
Following this approval by NPCI, Paytm will now provide the payment service in partnership with four new banks - Axis Bank, HDFC Bank, State Bank of India, Yes Bank. These banks will act as its Payment System Provider (PSP).
Moreover, Yes Bank will also act as the merchant acquiring bank for Paytm's existing and new UPI merchants and the Paytm handle would also be redirected to Yes Bank.
“@Paytm” handle shall be redirected to YES Bank, NPCI said in a statement.
"This will enable existing users and merchants to continue to do UPI transactions and AutoPay mandates in a seamless and uninterrupted manner," it further added.
Furthermore, NPCI has also directed Paytm to complete migration for all existing handles and mandates, wherever required, to new PSP banks at the earliest.
Paytm Payments Bank Crisis
Following restrictions imposed by the Reserve Bank of India (RBI) on the Paytm Payments Bank Ltd (PPBL), a number of Paytm services will stop working after March 15, 2024.
Citing persistent non-compliance and continued material supervisory concerns, top bank enforced certain restrictions on January 31. It also directed PBBL to not accept fresh deposits or top-ups after February 29, 2024. This deadline was later extended by 15 days to March 15, 2024.
In a bid to reduce confusion, the RBI also issued a set of Frequently Asked Questions (FAQs) on February 16, 2024 about the ensuing restrictions on the bank's services.
The list of services to be affected due to the restrictions include deposit into Paytm Payments Bank accounts, wallet top-ups and transfers, salary credit, subsidies or direct benefit transfers, FASTag recharge, etc while services like withdrawals from Paytm Payments Bank, refunds, monthly bill auto-deduction, auto debit for EMIs will remain unaffected.
