Paytm may partner with HDFC Bank, SBI for UPI payments ahead of RBI deadline - Hindustan Times

Paytm may partner with HDFC Bank, SBI for UPI payments ahead of RBI deadline: Report

ByVaishnawi Sinha
Feb 21, 2024 10:32 AM IST

RBI has issued a deadline to Paytm Payments Bank to halt their transactions and deposits by March 15 amid irregularities.

As Paytm Payments Bank continues to navigate its way through the ongoing crackdown by the Reserve Bank of India (RBI), it may take around three to six months to shift the accounts of customers to alternative banks, reported Business Standard.

Paytm users may take up to 6 months to shift banks(Bloomberg)
Paytm users may take up to 6 months to shift banks(Bloomberg)

A Business Standard report citing people aware of the matter said that all the existing Paytm customers may take around six months to shift to other banks, which is way past the deadline set by RBI for halting transactions for the Paytm Payments Bank.

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Sources said that Paytm is looking to apply for a third-party application provider (TPAP) licence from the National Payments Corporation of India (NPCI) amid the ongoing crisis. By getting this license, Paytm will be able to ensure that customers will be able to make UPI payments through the app.

This new development comes as parent company One 97 Communications remains concerned that RBI might revoke the banking license of Paytm Payments Bank, as the deposits and transactions from the accounts have been banned after March 15.

“It depends on how the RBI is thinking about the entire process. The shift does not happen overnight or over a period of a few days. The process of migrating all Paytm customers to another payment service provider (PSP) may take anywhere between three months and six months, given the large number of customer base that Paytm has,” Business Standard quoted a source as saying.

Further, it is expected that the virtual payment address for Paytm, which ends with @paytm, will remain functional after March 15.

Paytm UPI faces threat

Currently, Paytm customers are able to make their UPI payments through the VPA of the company. The UPI payments of Paytm operate under the Paytm Payments Bank license. If RBI ends up cancelling this license, this can halt the Paytm UPI transactions altogether.

Paytm is currently in talks with HDFC Bank, Axis Bank and the State Bank of India for partnership for its UPI payments, a source told Business Standard. To be sure, the payments bank license has not been cancelled by RBI yet.

The Financial Intelligence Unit (FIU) in its recent report highlighted that Paytm Payments Bank is not adhering to the KYC rules set by RBI for bank operations, leading to the central bank issuing a deadline of March 15 to Paytm to halt its credit, deposits and transactions.

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