The Reserve Bank of India (RBI) has taken steps to address the operational challenges faced by Paytm Payments Bank, instructing the National Payments Corporation of India (NPCI) to review One97 Communication Ltd's (OCL) plea to function as a Third-Party Application Provider (TPAP) for the UPI channel, a crucial component for the Paytm app's continued functionality.
Effective March 15, 2024, RBI has imposed limitations on Paytm Payments Bank, prohibiting it from accepting additional deposits into its accounts and wallets. This directive underscores the necessity for supplementary measures to ensure the uninterrupted flow of digital payments via the UPI channel facilitated by Paytm Payments Bank and to mitigate risks associated with relying solely on one payment app provider.
In a recent press release, RBI highlighted the urgency of implementing further measures to enable seamless digital transactions for UPI customers utilizing the '@paytm' identifier managed by Paytm Payments Bank, given its impending restriction on accepting new credits post-March 15, 2024.
Should NPCI grant TPAP status to OCL, a smooth transition of '@paytm' identifiers from Paytm Payments Bank to alternative banks may be imperative to prevent any disruptions. Until the satisfactory migration of all existing users to new identifiers is completed, OCL may be required to refrain from onboarding new users.
To facilitate the migration process of '@paytm' identifiers, NPCI may designate 4-5 banks as Payment Service Provider (PSP) Banks, tasked with managing high-volume UPI transactions. This approach aligns with NPCI's risk mitigation protocols aimed at diversifying risk exposure.
For merchants utilizing PayTM QR Codes, OCL might establish settlement accounts with one or more PSP Banks, excluding Paytm Payments Bank, as part of the transitional arrangements.
It's crucial to clarify that the migration of UPI identifiers pertains exclusively to users and merchants with '@Paytm' identifiers. Users with different UPI addresses need not take any action in this regard.
Customers holding accounts or wallets with Paytm Payments Bank are advised to explore alternative banking options before March 15, 2024, as previously communicated by RBI. Similarly, users of FASTag and National Common Mobility Cards issued by Paytm Payments Bank are urged to make alternative arrangements to avoid any inconvenience before the specified deadline.
RBI reiterated its advisory for holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank to proactively seek alternative arrangements before March 15, 2024, to mitigate potential inconvenience.
These measures are solely aimed at safeguarding the interests of customers and maintaining the integrity of the payment system, distinct from any regulatory actions undertaken by RBI concerning Paytm Payments Bank.
