The National Payments Corporation of India (NPCI) on Thursday granted approval to One97 Communications Ltd (OCL) to participate in UPI as a third-party application provider (TPAP) under multi-bank model.
Four banks — Axis Bank, HDFC Bank, State Bank of India, YES Bank — will act as payment system provider (PSP) banks to Paytm parent One97 Communications, the Vijay Shekhar Sharma-led fintech says in a statement.
YES Bank will also act as merchant acquiring bank for existing and new UPI merchants for One97 Communications, the statement says.
'@Paytm' handle shall be redirected to YES Bank. This will enable existing users and merchants to continue to do UPI transactions and AutoPay mandates in a seamless and uninterrupted manner, it adds.
Noida-based One97 Communications says it has been advised to complete migration for all existing handles and mandates, wherever required, to new PSP banks at the earliest.
The Reserve Bank of India (RBI) had ordered Paytm Payments Bank to stop accepting fresh deposits in its accounts and wallets from March 15. Paytm Payments Bank is 51% owned by Paytm CEO Vijay Shekhar Sharma while the remaining 49% is owned by One 97 Communications.
On Wednesday, the National Highways Authority of India (NHAI) advised Paytm FASTag users to procure a new FASTag issued by another bank before March 15, 2024. “This will help in avoiding penalties or any double fee charges while commuting on national highways,” it said.
In February, RBI governor Shaktikanta Das said the banking regulator gave ample time to Paytm Payments Bank to comply with regulations and business restrictions were imposed only when the entity did not listen to constructive engagement.
“We give sufficient time to every RE to comply with the requirements. Sometimes it may look more than sufficient. We are a responsible regulator. If everything has been complied with, then why should we act,” Das said in the post-policy press conference of the RBI.
The RBI has over the last few years deepened its supervisory systems. “Our emphasis is always on bilateral engagement with RE. We focus on nudging the RE to take corrective action and sufficient time is given,” said Das.
"When constructive engagement does not work. We go for imposing business restrictions. Such restrictions are proportional to the gravity of the situation," Das said, emphasising that all actions are in the best interest of systemic stability and depositors' interest.
The supervisory action on Paytm Payments Bank was taken after persistent non-compliance and months and years of bilateral engagement with the company, said RBI deputy governor Swaminathan J.
"We provide more than adequate time to take corrective action. As a regulator, it is incumbent upon us to protect the interest of the ultimate consumer and thereby protecting the stability of the financial system," the deputy governor said.
