What's RBI's next move for Paytm users?

What’s RBI’s next move for Paytm users?

The Reserve Bank of India will meet with the country’s highways authority and National Payments Corporation of India (NPCI) among others next week, to finalise modalities for the migration of merchants and consumers from crisis-ridden Paytm, people aware of the matter said.

National Highways Authority of India (NHAI) which operates the Fastag service as well as NPCI that oversees the Unified Payment Interface (UPI) infrastructure among other stakeholders will be part of the discussions with the central bank ahead of the release of frequently asked questions (FAQs) by the regulator.

The FAQs will be addressing various queries received by the central bank on Paytm, following last week’s regulatory restrictions imposed on the Noida-based firm’s payments bank.

“Basically the idea is to guide merchants on the transition issues,” said one person cited above.Paytm Payments Bank Ltd. (PPBL) was barred from taking fresh deposits and providing any banking services after February 29, by the central bank.

Speaking at a post-monetary policy interaction with reporters on Thursday, RBI governor Shaktikanta Das said the regulator would come out with clarifications in the coming week.

Earlier, financial services secretary Vivek Joshi had told ET in an interview on February 7, that the banking regulator may come out with a clarification.

The abrupt ban on PPBL’s services has caused widespread uncertainty amongst Paytm’s customers and merchant partners.

They are seeking clarity on how the Reserve Bank of India’s move will impact their wallets and payment acceptance devices.

“NPCI is working towards ensuring that the UPI experience is not disrupted. It is in talks with the central bank to ensure smooth transition to other banks,” said another person aware of the discussions.

On its part, Paytm told analysts, last week, that it will have to undertake the exercise of transferring virtual payment addresses (VPAs) for Unified Payments interface (UPI) accounts as well as merchant quick response (QR) codes linked with PPBL to other banking partners.

Further, Fastags and wallets issued through PPBL will also need to be transferred to other banks, the company said.

In its latest directive against PPBL on January 31, RBI said a thorough external audit of Paytm revealed “persistent non-compliances and continued material supervisory concerns in the bank.” Paytm Payments Bank has been under an embargo from adding new customers from March 11, 2022.

‘Bilateral engagement’

Lenders might also have to await central banks’ nod before taking on Paytm’s payments settlements business, ET reported on February 5.

Making its stance on the issue clear, RBI Governor Das said on Thursday that the regulator has always laid emphasis on ‘bilateral engagement’ with regulated entities, nudging them to take corrective action with ‘sufficient time’ provided to take these steps.

“When constructive engagement does not work or REs (Regulated Entities) do not act, we go for supervisory or business restriction,” Das said.

“Such restrictions which we impose are always proportionate to the gravity of the situation. All our actions, being a responsible regulator, supervisor, are in the best interest of systemic stability and protection of depositors or customers’ interest. These aspects can not be compromised,” the governor stated.

Read our detailed coverage on the Paytm crisis:

For more news like this visit The Economic Times.