On Friday, February 23, the Reserve Bank of India (RBI) advised the National Payments Corporation of India (NPCI) regarding Paytm’s request. Paytm wants to become a third-party app provider for unified payments interface (UPI) payments. RBI also announced that Paytm Payments Bank Limited (PPBL) won’t accept any more credits into its customer accounts and wallets after March 15, 2024.
NPCI’s Task and Potential Changes for Paytm
- The RBI instructed NPCI to consider Paytm’s request to be a third-party app provider for UPI payments.
- If approved, Paytm can keep processing UPI payments but will need new banks to support its app.
- NPCI should choose four to five banks capable of handling high volumes of UPI payments to support Paytm, according to RBI.
Reasons Behind RBI’s Directives
- RBI issued these directives to ensure smooth digital payments through Paytm and reduce risks in the UPI system.
- New users won’t be added until existing users are successfully shifted to a new handle.
Steps for Paytm’s Continued Operations
- Paytm may open settlement accounts with one or more banks to maintain its QR codes.
- NPCI will certify four to five banks as Payment Service Provider (PSP) Banks to facilitate the smooth transition of Paytm handles.
Paytm’s Status and Recent Developments
- Paytm is the third-largest app for UPI payments in India, handling 1.6 billion monthly transactions.
- Last week, Paytm partnered with Axis Bank.
- Earlier, on January 31, RBI imposed restrictions on PPBL due to non-compliance issues, with additional time granted until March 15, 2024.
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