RBI Announces Additional Measures Regarding Paytm Payments Bank under Banking Regulation Act

In a recent development, the Reserve Bank of India (RBI) has introduced additional steps under Section 35A of the Banking Regulation Act, 1949, regarding Paytm Payments Bank. This comes after earlier business restrictions imposed on March 11, 2022, January 31, and February 16, 2024.

To ensure uninterrupted digital payments via UPI channels using the '@paytm' handle, the RBI has directed the National Payments Corporation of India (NPCI) to consider One97 Communication Ltd's (OCL) request to become a Third-Party Application Provider (TPAP) for UPI operations. If approved, the migration of '@paytm' handles to newly identified banks will be executed seamlessly to avoid disruptions.

Merchants using PayTM QR Codes are advised to open settlement accounts with one or more PSP Banks, excluding Paytm Payments Bank. The move aims to minimize concentration risk in the UPI system by diversifying payment app providers.

Customers and merchants holding UPI handles '@Paytm' are subject to the migration process, whereas others with different UPI addresses need not take any action. Users with accounts/wallets under Paytm Payments Bank are encouraged to make alternative arrangements with other banks well before March 15, 2024.

The holders of FASTag and National Common Mobility Cards (NCMC) from Paytm Payments Bank are urged to establish alternative arrangements before the specified date to prevent inconvenience.

These measures are enacted in the best interest of customers and the payment system, without prejudice to the regulatory actions initiated by RBI against Paytm Payments Bank.