RBI directs NPCI to certify 4-5 banks for migration of @paytm UPI handles
RBI said it issued these directives to ensure the Paytm app continued to facilitate UPI transactions and minimise concentration risk in the UPI system by having multiple payment app providers.
The Reserve Bank of India (RBI) has advised National Payments Corporation of India (NPCI) to consider the request of parent One97 Communication Ltd to become a Third-Party Application Provider (TPAP) for UPI transactions.
For the seamless migration of the '@paytm' handle to other banks, NPCI may facilitate the certification of 4-5 banks as Payment Service Provider banks with demonstrated capabilities to process high-volume UPI transactions, the RBI said on Friday.
RBI said it issued these directives to ensure the Paytm app continued to facilitate UPI transactions and minimise concentration risk in the UPI system by having multiple payment app providers. The migration of UPI accounts applies only to those customers and merchants who have an '@paytm' UPI handle.
A UPI handle or a Virtual Payment Address (VPA) is a digital ID that lets users receive and send funds conveniently through UPI-enabled apps. Most UPI apps like PhonePe and BharatPe have a partner bank which provides a VPA. If a UPI account is linked to a YesBank account, then the VPA will end with '@ybl'.
"All the above 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," the central bank said in a statement.
Customers with underlying accounts/wallets with Paytm Payments Bank are advised by the regulator to make alternative arrangements with other banks before March 15, 2024.
"No new users are to be added by the said TPAP until all the existing users are migrated satisfactorily to a new handle," the RBI added.
Earlier, One97 Communications transitioned its nodal account to Axis Bank from Paytm Payments Bank, it said in a regulatory filing. This was done to ensure the continuity of Paytm's essential services such as QR codes, Soundbox, and card machines, even after the March 15 deadline set by the central bank.
In January, the RBI directed Paytm Payments Bank to stop accepting new deposits from February 29, 2024, due to "persistent non-compliances" and "continued material supervisory concerns". The deadline was later extended to March 15.
Edited by Kanishk Singh