As RBI deadline nears, Paytm and Axis Bank to jointly submit TPAP application with NPCI this week: Report

Vijay Shekhar Sharma-led fintech giant Paytm parent company One97 Communications and Indian private lender Axis Bank are set to submit an application to the National Payments Corporation of India (NPCI) to become a third-party application provider (TPAP) for the Unified Payments Interface (UPI) platform.

The move comes as the Reserve Bank of India's (RBI) deadline approaches, compelling Paytm to seek partnerships with banks to sustain its UPI operations due to restrictions placed on Paytm Payments Bank Limited (PPBL).

What was the RBI's directive?

Late last month, The Reserve Bank of India directed PPBL to halt all banking services, except for withdrawals, affecting Paytm's UPI transactions. 

Previously, Paytm operated its UPI services through PPBL without needing a bank partnership. However, the RBI's restrictions have forced Paytm to align with Axis Bank and consider partnerships with other major banks to continue its UPI business.

A TPAP license allows a company to use another bank's infrastructure to process UPI payments made through their platform.

Maintaining its operations in the UPI ecosystem 

The report said that Paytm's decision to apply for a TPAP license, with Axis Bank's support, is crucial for maintaining its operations in the UPI ecosystem. The move is also aimed at ensuring that Paytm's 90 million UPI users do not face disruptions in service. 

Discussions with other banks

Notably, the RBI-hit fintech giant is also in discussions with several other banks, including Yes Bank, HDFC Bank, ICICI Bank, and Canara Bank; however, none have concluded yet.

The development comes a few days after Paytm shifted all nodal accounts, maintained by PPBL, to private lender Axis Bank. This enabled Paytm QR, Soundbox and Card machines to remain operational beyond March 15, 2024.

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