RBI reviews Paytm's request for UPI operation

PTC News Desk: The Reserve Bank of India (RBI) has taken significant steps to address the request put forth by Paytm, officially known as One 97 Communications, aimed at facilitating the continued processing of payments through India's widely used Unified Payments Interface (UPI).

In a statement released on Friday, the RBI disclosed that it has directed the National Payments Corporation of India (NPCI) to carefully evaluate Paytm's plea to function as a third-party application provider (TPAP). This move, if sanctioned, would enable Paytm to persist in its role of handling payments via India's popular UPI platform.

The central bank's action comes in the wake of its directive issued on January 31, instructing Paytm Payments Bank, an entity associated with Paytm, to cease its operations by March 15. This directive caused disruptions for the widely-used payment application, as it relied on the banking services provided by Paytm Payments Bank as its backend infrastructure.

As part of the transition process, a new consortium of banks has been identified to support the Paytm application. In order to ensure a smooth transition, the RBI has urged the NPCI, the regulatory body overseeing payment systems in India, to oversee and manage the migration process effectively.

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The RBI has further emphasised that no new users should be added by Paytm as a TPAP until all existing users have been successfully migrated to the new system. This precautionary measure aims to maintain operational continuity and prevent any disruption in services during the transition phase.

In summary, the RBI's proactive measures reflect its commitment to safeguarding the integrity and stability of India's digital payment ecosystem while addressing the operational challenges faced by key players like Paytm.

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(Inputs from agencies)

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