A big relief for Paytm after NPCI nod to onboard new UPI users

Nearly nine months after the Reserve Bank of India (RBI) placed an embargo on One97 Communications (OCL) to add new customers, the National Payments Corporation of India (NPCI) has given nod to the company to onboard new UPI users, subject to adherence to all procedural guidelines and circulars.

The development is expected to come as a big respite to OCL, the parent company of fintech firm Paytm. The approval signifies regulatory comfort, enabling the company to enhance and streamline its UPI operations.

In a BSE filing, that also attached the NPCI letter granting the approval, Paytm said, "We would like to inform you that vide letter dated October 22, 2024, the National Payments Corporation of India (NPCI) has granted approval to the company to onboard new UPI users, with adherence to all NPCI procedural guidelines and circulars."

As stated in the letter, the NPCI's approval is subject to adherence to all NPCI procedural guidelines and circulars issued from time to time, including guidelines and circulars issued specifically on risk management, brand guidelines for app and QR, multi-bank guidelines, TPAP Market share and customer data.

One97 Communications will also need to adhere to the requirements outlined in the tri-partite agreement with NPCI and PSP Banks. The NPCI letter addressed to Vijay Shekhar Sharma, founder and CEO of One97 Communications, said, “Adhere to all laws and regulatory guidelines as applicable and issued from time to time including Payments and Settlement Act 2007, Information Technology Act, 2000, Digital Personal Data Protection Act, 2023 and circular on Storage of Payment System Data, 2018.”

In allowing One97 Communications to onboard new users on their UPI application, the NPCI acknowledged receipt of a letter from the company dated August 1, 2024, in which it requested approval to resume onboarding new UPI users on the Paytm app. This process had previously been halted following RBI directives issued on January 31, 2024, and February 16, 2024.

Listing out the various conditions, the Paytm filing said, “Upon examination of your request, we hereby accord our approval and permit One97 Communications Private Limited (OCL) to onboard new users on their UPI application.”

In a decisive action against Paytm Payments Bank (PPBL), the RBI instructed the bank on January 31 to cease accepting deposits or top-ups for customer accounts, wallets, FASTags, and other financial instruments, citing ongoing non-compliance and significant supervisory issues.

Paytm currently commands a 7 per cent share in the UPI ecosystem, which is largely led by PhonePe and Google Pay, together holding 85 per cent. Its market share has fallen from 13 per cent in January to around 7 per cent in September, following restrictions on onboarding new users. Despite this decline, Paytm is still the third-largest player in the UPI landscape.