In a bid to ensure uninterrupted payment operations for Paytm users, the National Payments Corporation of India (NPCI) has given approval for the company to continue facilitating UPI transactions through four major banks: SBI, Axis Bank, HDFC Bank, and YES Bank.
This development comes just ahead of the March 15 deadline set by the Reserve Bank of India (RBI), which prohibits Paytm Payments Bank Ltd (PPBL) from accepting deposits, credit transactions, or top-ups in any customer accounts. PPBL, owned by One97 Communications Limited (OCL) with a 49 per cent stake, is facing this directive from the RBI.
RBI has advised all PPBL customers to transition to other banks by March 15, affecting approximately 30 crore wallets and 3 crore bank customers.
In a statement, NPCI announced its approval for One97 Communications Limited (OCL) to operate as a Third-Party Application Provider (TPAP) under the multi-bank model, with the four aforementioned banks acting as Payment System Provider (PSP) banks to OCL. YES Bank will additionally serve as the merchant acquiring bank for both existing and new UPI merchants associated with OCL.
Moreover, NPCI disclosed that the '@Paytm' handle will be redirected to YES Bank, ensuring uninterrupted UPI transactions and autoPay mandates for existing users and merchants.
The OCL has been instructed to swiftly migrate all existing handles and mandates to new PSP banks as required, NPCI stated.
RBI Governor Shaktikanta Das assured that 80-85 per cent of Paytm wallet users will not experience any disruption due to regulatory actions. However, remaining users are advised to link their apps to alternative banks.
RBI's actions against PPBL began on January 31, when it directed the bank to cease accepting deposits or top-ups in any customer accounts, wallets, FASTags, and other instruments by February 29, later extended to March 15, due to persistent non-compliance and supervisory concerns.
In response to regulatory measures, Paytm Payments Bank's promoter Vijay Shekhar Sharma resigned as part-time non-executive Chairman last month, leading to a reconstitution of the bank's board, with individuals such as former Central Bank of India chairman Srinivasan Sridhar and former Bank of Baroda Executive Director Ashok Kumar Garg joining.
Furthermore, NHAI has advised Paytm FASTag users to acquire a new FASTag from another bank before March 15 to ensure seamless travel and avoid inconvenience at toll plazas.
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