Embattled Indian FinTech Paytm is reportedly turning to a group of banks for help.
The company is likely to work with Aix Bank, HDFC, Yes Bank and the State Bank of India to process transactions though India’s popular unified payments interface (UPI), Reuters reported Monday (Feb. 26), citing two sources familiar with the matter.
The news comes as the Reserve Bank of India (RBI), India’s central bank and banking regulator, has asked Paytm’s banking operations — Paytm Payments Bank — to shutter its business.
UPI is India’s real-time payment system, run by the National Payments Corporation of India (NPCI), and allows people to transfer money across banks.
As PYMNTS reported last week, the RBI has asked NPCI to consider a request by Paytm parent One97 Communications to become a third-party application provider (TPAP) for UPI, allowing it to continue operating its app despite the regulator’s restrictions.
“As the Paytm Payments Bank cannot accept further credits into its customer accounts and wallets after March 15, 2024, certain additional steps have become necessary to ensure seamless digital payments by UPI customers using ‘@paytm’ handle operated by the Paytm Payments Bank, and minimize concentration risk in the UPI system by having multiple payment app providers,” RBI said in a news release.
If NPCI grants TPAP status to One97 Communications, “@paytm” handles will be migrated from Paytm Payments Bank to other banks “to avoid any disruption,” RBI said.
NPCI can help certify four to five banks as payment service providers, as long as they have shown they can process high-volume UPI transactions.
“Talks to onboard banking partners are on, and Paytm wants to start this process with large banks that have the technological bandwidth to handle large volumes seamlessly,” one of the sources told Reuters.
The RBI announced last month that it had ordered Paytm Payments Bank to halt banking activities after Feb. 29, which means the bank cannot take deposits, allow credit transactions, or permit top-ups on customer accounts, wallets, cards or prepaid instruments.
The regulator said an audit found compliance issues tied to the bank and had in 2022 ordered the company to stop accepting new customers pending an audit.
Paytm expressed its desire to keep the digital wallet business operational by establishing new banking relationships.
“Your favorite app is working, will keep working beyond 29 February as usual,” Paytm CEO Vijay Shekhar Sharma said in a Feb. 1 post on X.
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