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The Reserve Bank of India (RBI), exercising its powers under Section 35A of the Banking Regulation Act, 1949, had earlier placed business restrictions on Paytm Payments Bank Ltd., as communicated through Press Releases dated March 11, 2022, January 31, 2024, and February 16, 2024. In addition, RBI had issued a set of FAQs on February 16, 2024, to guide customers, wallet holders, and merchants using banking services provided by Paytm Payments Bank.
Since Paytm Payments Bank will not be able to accept further credits into its customer accounts and wallets after March 15, 2024, RBI has announced additional steps to ensure seamless digital payments for UPI customers using the ‘@paytm’ handle and to minimise concentration risk in the UPI system.
The National Payments Corporation of India (NPCI) has been advised to examine the request of One97 Communications Ltd. (OCL) to become a Third-Party Application Provider (TPAP) for continued UPI operations of the Paytm app. In case NPCI grants TPAP status to OCL, the ‘@paytm’ handles will be migrated seamlessly from Paytm Payments Bank to newly identified banks to avoid disruption. No new users will be added by the TPAP until the migration of existing users is complete.
For this purpose, NPCI may certify 4–5 banks as Payment Service Provider (PSP) Banks capable of processing high-volume UPI transactions. Merchants using Paytm QR Codes will also be required to open settlement accounts with one or more PSP Banks other than Paytm Payments Bank.
It is clarified that these migration measures apply only to customers and merchants with a UPI handle ‘@paytm’. Customers with other UPI handles or addresses are not affected. Customers whose underlying account or wallet is currently with Paytm Payments Bank are advised to make alternative arrangements with other banks well before March 15, 2024. Similarly, holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank are advised to make alternative arrangements before this date to avoid inconvenience.
RBI emphasized that all these measures are being undertaken solely to protect customers and the payment system from potential disruptions and are without prejudice to ongoing regulatory or supervisory actions against Paytm Payments Bank.
[RBI]