Paytm Receives NPCI Approval as Third-Party App Provider

The National Payments Corporation of India (NPCI) has granted the Third-Party Application Provider (TPAP) license to One97 Communications Ltd, the parent company of Paytm,

One day before the Reserve Bank of India's (RBI) imposition of restrictions on Paytm Payments Bank Ltd (PPBL).

Paytm Granted UPI License with Multi-Bank Model

The license enables the fintech giant to run UPI services using a multi-bank business model. The institutions that will serve as One 97 Communications' payment system provider (PSP) include Axis Bank, HDFC Bank, State Bank of India, and Yes Bank.

Additionally, Yes Bank will serve as a merchant acquisition bank for both new and current UPI merchants for OCL.

YES Bank will be the destination of the "@Paytm" handle. In a statement, the NPCI stated, "This will enable current users and merchants to continue doing UPI transactions and AutoPay mandates in a seamless and uninterrupted manner."

As per the payments body's statement, One97 Communications has been urged to expeditiously finalize the transfer of all current handles and mandates, if necessary, to new PSP banks.

With the license, the fintech business is able to carry on with its Unified Payments Interface (UPI) business with the PSP banks stated before. These banks allow transactions on the platform of the TPAP license holder because they are UPI members.

NPCI Approval Signals New Chapter for Paytm with PPBL

Paytm has joined the ranks of Google Pay, PhonePe, CRED, and slice as the 25th TPAP licence holder with the approval of NPCI.

It is significant to remember that Paytm used PPBL to make its app's transactions possible.

The Vijay Shekhar Sharma-led company chose to collaborate with other PSP banks after the RBI prohibited it from carrying out any more bank-related activities beyond March 15.

Paytm revealed that it had moved its nodal account to Axis Bank a little more than two weeks following the regulatory action against PPBL.

A contract to transfer its merchant accounts to Yes Bank was later inked by the massive fintech company.

Through their cooperation, Paytm will be able to enroll additional merchants and consumers as well as take advantage of long-term cross-selling opportunities.

Paytm Gains NPCI License Amid Regulatory Strain

Paytm is relieved to have received the NPCI license. Following the RBI's announcement of its PPBL limits, the company's shares have fallen by around 60%.

Additionally, last month six mutual funds fully sold their positions in the parent firm of Paytm, while another six drastically decreased their holdings.

At the end of February, there had been approximately 91 lakh shares divested, valued at INR 380 Cr.

As of today's closing bell on the BSE, Paytm's shares were up 0.4% at INR 353.25.