6 Feb 2024 , 11:45 AM
Even as One97 Communications Limited, which controls Paytm, seeks bank partnerships to transfer all Paytm Payments Bank Limited accounts, at least half a dozen public and private sector bank officials who were interviewed stated that they are reticent to take on the business.
Following the Reserve Bank of India’s (RBI) debilitating steps on PPBL last week, which rendered banking activities inaccessible for consumers except to withdraw current balances, the banks are awaiting regulatory guidance before signing the agreement.
Six top banking executives from big private and public sector banks said they are apprehensive about working with Paytm in light of the RBI’s steps and have requested details on the concerns that led to the RBI move. They are also waiting for clarity and transparency from OCL before going further.
OCL wishes to transfer all merchant and customer accounts maintained by PPBL, as well as the UPI address with @paytm as the VPA (virtual payment address) and managed by PPBL. This is critical for Paytm to guarantee that these merchants remain within the Paytm app even if the backend sponsor bank changes.
Paytm has contacted practically all of the main banks, and executives have stated that they consider this a liability in light of the RBI’s announcement that there have been significant compliance and regulatory failings.
The migration process consists of two components. For PPBL accounts, new accounts must be established, and KYC procedures need to be conducted afresh, representing a substantial undertaking. As for mapping the merchant UPI handle to the new non-PPBL bank account, it involves a technical switch and is feasible. NPCI’s role is limited in the account opening process beyond a certain stage. When a regulator raises a significant concern, it must be addressed rather than ignored, according to the chief digital officer of a prominent public sector bank.
On the other hand, Paytm stated that the information is factually false, unsubstantiated, and based on guesswork. ‘We completely refute it. Paytm has collaborated with a number of top third-party banks over the past two years. We are expanding these relationships, and they are going well,’ the business stated in a statement.
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