Paytm Payments Bank Crisis: RBI Announces Additional Measures For Seamless UPI Payments By Customers

After the RBI last month put certain business restrictions on Paytm Payments Bank, including restricting it from accepting further credits after March 15, the central bank on Friday, February 23, announced several measures to ensure seamless digital payments by UPI customers using ‘@paytm’ handle.

According to the RBI’s notification on Friday, NPCI has been asked to examine the request of One97 Communication (OCL), the owner of Paytm, to become a third-party application provider (TPAP) for UPI channel for continued UPI operation of the Paytm app; to facilitate seamless migration of ‘@paytm’ handle to other banks; and facilitate new settlement accounts for merchants who are using Paytm QR codes.

“As the Paytm Payments Bank cannot accept further credits into its customer accounts and wallets after March 15, 2024, certain additional steps have become necessary to (i) ensure seamless digital payments by UPI customers using ‘@paytm’ handle operated by the Paytm Payments Bank, and (ii) minimise concentration risk in the UPI system by having multiple payment app providers,” the RBI said in the statement.

The additional steps are as follows:

1) National Payments Corporation of India (NPCI) has been advised by the RBI 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, as per the norms.

2) It has been 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.

3) 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. This is in line with NPCI norms for minimising concentration risk1.

For the merchants using PayTM QR Codes, OCL may open the settlement accounts with one or more PSP Banks (other than Paytm Payments Bank).

The RBI also clarified that:

The migration of UPI handles as above is applicable only to such customers and merchants who have a UPI handle ‘@Paytm’. For others who have a UPI address or handle other than ‘@Paytm’, no action is required to be taken by them.

Similarly, the customers, whose underlying account/ wallet is currently with Paytm Payments Bank, are advised to make alternative arrangement with other banks well before March 15, 2024.

“It is reiterated that the holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank, may make alternative arrangements before March 15, 2024 to avoid any inconvenience,” the RBI stated.

Last week, the RBI extended deadlines on certain business restrictions regarding Paytm Payments Bank Ltd (PPBL) by 15 days till March 15, 2024, as against the February 29 decided earlier. The deadlines were extended on services like top-ups and fund transfers, while the remaining PPBL services would be shut on February 29 only.