Tag: reserve bank of india

RBI Moves to Ensure UPI Transactions on Paytm Continue to Work After Strictures on Paytm Payments Bank

The Reserve Bank of India said on Friday it has asked the National Payments Corporation of India (NPCI) to examine a request from Paytm, formally known as One 97 Communications, to become a third party application provider (TPAP).

If approved, this would allow Paytm to continue processing payments via India’s popular unified payments interface (UPI), but will need a set of newly identified banks to back the app.

The NPCI should facilitate four to five banks, with an ability to process high volumes of UPI payments, to act as service providers to Paytm, the RBI said of Friday.

“No new users are to be added by the said TPAP until all the existing users are migrated satisfactorily to a new handle,” the RBI said.

Last month, the central bank asked Paytm Payments Bank, an associate of Paytm, to wind down its business by March 15, leading to disruption for the popular payment app, which used the banking unit at the back end.

Paytm is the third largest app for UPI payments in the country, processing 1.6 billion monthly transactions, according to data available on the NPCI website. PhonePe and Google Pay are the two largest.

To keep Paytm QR codes running, the company may open settlement accounts with one or more banks, the RBI said.

Paytm said last week it had signed on Axis Bank to act as a banking partner.

© Thomson Reuters 2024

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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RBI Not Planning Harsher Rules to Curb Fintech Sector After Paytm Strictures, Official Says

India’s banking regulator doesn’t intend to impose drastic measures on the country’s fintech sector, a senior official said, weeks after it stunned investors by abruptly suspending much of the operations of Paytm Payments Bank, founded by high-flying billionaire Vijay Shekhar Sharma.

There are “no harsher measures coming on fintech,” P. Vasudevan, an executive director in charge of enforcement at the Reserve Bank of India, said on Friday. The central bank would be happy to see self-regulation for the sector, but expected firms to follow rules on data privacy, Vasudevan said. He added the supervisor wants to have a hands-off approach on fintech regulation.

The comments from Vasudevan, a key official closely involved in the development of the payments space in India in the past decade, are comforting even as the regulator cranks up its actions against payments firms violating the customer verification and data protection norms put in place by the central bank.

SoftBank Group Corp.-backed Paytm, a giant in India’s fintech space, has been in the crosshairs of the regulator for some time, with multiple warnings over the past two years about questionable dealings between its popular payments app and its lesser-known banking arm. The RBI is considering scrapping the license of Paytm Payments Bank Ltd. as early as next month, Bloomberg reported earlier this month.

Apart from imposing measures against Paytm bank, the regulator caused anxiety among payments services providers this week after it asked a large card network to halt certain operations. The card network, the central bank argued, was not allowed to offer a payment system without having authorization.

RBI officials, including Governor Shaktikanta Das, had said earlier this month that the regulator is supportive of the fintech industry and wants companies to grow.

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EPFO to Halt Claims Made via Paytm Payments Bank Following RBI Restrictions

India’s state-run social security fund will halt claims made via Paytm Payments Bank accounts from Feb. 23, as the country’s central bank imposed restrictions on the payments bank due to persistent irregularities, a government order said.

The Employees’ Provident Fund Organisation (EPFO) has asked its officers to refrain from accepting claims linked with accounts in Paytm Payments Bank, an associate of One 97 Communications, according to the order, which was reviewed by Reuters.

The order was issued by the EPFO on Thursday, which comes under India’s Ministry of Labour and Employment.

The move comes after the Reserve Bank of India, last week, directed Paytm Payments Bank to stop accepting new deposits in its accounts or digital wallets from March, citing supervisory concerns and non-compliance with rules.

The EPFO — which has a corpus of over 18 trillion rupees ($216.89 billion) covering nearly 300 million workers — had allowed Paytm Payments Bank to settle claims in November 2023.

The state-run social security fund also overseas workers’ pension funds.

© Thomson Reuters 2024

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Reserve Bank of India Calls on More Lenders to Take Part in Pilot for Retail Digital Rupee: Report

The Reserve Bank of India (RBI) has called on a wider set of lenders to take part in pilot programmes using the central bank digital currency (CBDC) as it tries to increase transactions, three bankers told Reuters on Wednesday.

Nearly two dozen central banks across emerging and advanced economies are expected to have digital currencies in circulation by the end of the decade, the Bank for International Settlements (BIS) found in a survey, published on Monday.

Last year, the RBI began trials using CBDCs, termed e-rupees, in both the wholesale and retail markets.

Currently, large state-owned and private lenders, including State Bank of India, Bank of Baroda, ICICI Bank, HDFC Bank, Kotak Mahindra Bank and Yes Bank, are among those participating in the pilot project.

“The RBI has asked smaller banks to either tie up with fintech players or develop their systems to start CBDC pilots this year,” said the technology head of a state-owned bank, who attended the meeting with RBI officials on Tuesday.

“We will now have to float tenders to get interested fintech partners on board and evaluate the costs involved. This process is expected to take about four-five months.”

The bankers did not wish to be named as they were not authorised to speak to the media.

The RBI aims to reach a target of one million CBDC transactions per day by the end of this year, RBI deputy governor T Rabi Sankar said on Tuesday.

There were 1.3 million customers and 0.3 million merchants, who used CBDC as of June 2023, he said.

“By getting more banks to participate in the pilots, the RBI wants to see if there are any glitches in implementation and conduct pilots on a large user base,” said another banker with a state-owned bank.

“We are in the advanced stage of submitting a CBDC pilot request to the RBI. We expect the approval to come in the next one-two months.”

The central bank has also asked smaller banks to seek feedback from those currently conducting the pilots, the bankers said.

The RBI did not immediately respond to a Reuters’ email seeking comment.

© Thomson Reuters 2023

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Paytm Wins RBI Extension for Payment Aggregator Licence Application: Details

Indian financial technology company Paytm Payments Services has received an extension from the country’s banking regulator to apply for a payment aggregator licence and aims to reapply in about 15 days, the company said on Sunday.

Paytm Payments Services, in the meantime, can continue with the online payment aggregation business for its existing partners, without taking on any new merchants, the company said in a notification to stock exchanges on Sunday.

Paytm Payments Services is a wholly owned subsidiary of One 97 Communications.

Payment aggregators, platforms that bring together various online payment options, must be licensed by India’s central bank and banking regulator, Reserve Bank of India.

In November, India’s banking regulator had declined a payment aggregator licence for the One 97 Communications unit that owns the popular Paytm brand.

The company said that the latest move has no material impact on its business and revenue and for the offline part of the business, the company can continue to take on new merchants and offer them payment services.

Last month, Paytm said EBITDA (earnings before interest, taxes, depreciation, and amortisation), an indicator of operational profit, before ESOP cost margin improved to Rs. 31 crore during the third quarter ended December 31, 2022.

The company has calculated an incentive of Rs. 130 crore from UPI transactions in three quarters but CEO Vijay Shekhar Sharma said that the incentive may technically make the fourth quarter a free cash flow positive quarter but Paytm will report as a one-time item.

“UPI incentive will be one-off and we will explicitly call out as one-off. Rs. 130 crore that we are quoting is for three quarters. The fourth quarter number will be topped on top of it. Because we are calling it one-time item, we are not calling it free cash flow generative. We would rather say free cash flow generative when we are consistently sure of it,” Sharma said during the earnings call in February.

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