RBI to approach NHAI, NPCI to discuss alternate plans for Paytm Payments Bank users: Report

The Reserve Bank of India (RBI) will be approaching the officials of the National Highways Authority of India and the National Payments Corporation of India (NPCI) in the next couple of days to finalise the procedure of migration of merchants and consumers from Paytm to other mediums, a report said. Last month, the central bank directed Paytm Payments Bank to suspend its major banking services due to regulatory lapses. The RBI's directive stated that Paytm Payments Bank services will stop operations after February 29.

The central bank has directed Paytm Payments Bank not to accept top-ups or deposits in any customer accounts including wallets, FASTags, and other instruments after February 29. Paytm FASTag, which is used to pay tolls on highways, is one of the most used services of the Paytm Payments Bank. The FASTag service is directly linked to the Paytm wallet.

To ease the process of digital transactions and payment at tolls, the RBI has asked officials of NHAI, which operates the Fastag service, and NPCI, which handles the Unified Payment Interface (UPI) infrastructure, to participate in the discussion with other stakeholders, the Economic Times reported on Friday. The meeting will be held before the central bank releases the frequently asked questions (FAQs) on fintech operations next week.

The FAQs, as declared by the RBI on February 8, will have answers to various queries on Paytm and Paytm Payments Bank's operations after the regulatory curb.

The RBI on Thursday said the action against Paytm Payments Bank was based on persistent non-compliance. “This is supervisory action for persistence non-compliance. Such action is invariably preceded by months and sometimes years of bilateral engagement where we point out the deficiencies but also give time to take corrective action. As a regulator, it is incumbent upon us to protect the consumer,” RBI deputy governor Swaminathan J. said at the press conference.

The RBI's punitive action against Paytm is largely attributed to the company's incomplete adherence to Know-Your-Customer (KYC) verification norms during customer onboarding. The RBI had taken action in the form of imposing a penalty against Paytm Payments Bank last year and even then the issue did not get resolved.

"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," Governor Das said on Thursday.

Paytm Payments Bank has been facing RBI scrutiny since 2018. It was also observed that the bank was allowing transactions above the permissible limit, which raised concerns over money laundering.

Also read: Paytm Payments Bank crisis: Separate FAQ to come out on fintechs soon, says RBI Guv

Also read: Why action was taken against Paytm Payments Bank? Here's what the RBI said

Also read: EPFO to block credits, deposits into EPF accounts linked with Paytm Payments Bank from Feb 23