“NPCI to Review Paytm’s UPI Third-Party App : RBI “
In response to the Reserve Bank of India’s (RBI) recent directives against Paytm Payments Bank, the National Payments Corporation of India (NPCI) has been advised by the RBI to scrutinize One97 Communication Limited’s request for approval of the Third-Party Application Provider (TPAP) route. This request was made by One97 Communication Limited, the parent company of the fintech giant Paytm, in order to ensure the continuity of Paytm’s Unified Payments Interface (UPI) services.
In response to the Reserve Bank of India’s (RBI) recent directives against Paytm Payments Bank, the National Payments Corporation of India (NPCI) has been advised by the RBI to scrutinize One97 Communication Limited’s request for approval of the Third-Party Application Provider (TPAP) route. This request was made by One97 Communication Limited, the parent company of the fintech giant Paytm, in order to ensure the continuity of Paytm’s Unified Payments Interface (UPI) services.
RBI’s move follows its issuance of a set of directives on January 31st, citing “persistent non-compliances” by Paytm Payments Bank. Among these directives was a ban on adding new customers, initially set to take effect from February 29th but later extended to March 15th. In response to the regulatory measures, One97 initiated efforts to forge partnerships with external banks, aiming to safeguard the uninterrupted provision of Paytm’s UPI services. Already, a partnership has been established with Axis Bank for settling merchant payments, with discussions underway with several other potential partners.
According to RBI’s advisory, should NPCI grant TPAP status, a seamless transition of ‘@paytm’ handles from Paytm Payments Bank to a new set of identified banks would be required to prevent any disruptions in service. Furthermore, the third-party app must refrain from adding new users until existing ones have been satisfactorily migrated to the new handle. To facilitate this migration process smoothly, NPCI is encouraged to certify up to five banks as “Payment Service Provider (PSP) Banks,” with demonstrated capabilities to handle high-volume UPI transactions.
The directive underscores RBI’s commitment to maintaining the integrity and compliance of banking and payment systems, ensuring consumer protection and systemic stability. It also highlights the evolving regulatory landscape in India’s fintech sector, where companies like Paytm navigate stringent oversight while striving to innovate and expand their services.
Paytm, a prominent player in India’s digital payments ecosystem, has been at the forefront of driving financial inclusion and digitization. However, recent regulatory actions indicate the need for fintech firms to adhere rigorously to regulatory standards and address any non-compliance issues promptly.
As NPCI evaluates Paytm’s request under the TPAP route, stakeholders await further developments in this ongoing saga, keenly observing how the regulatory framework will shape the future landscape of digital payments in India.
Sources By Agencies
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