Paytm has also likely applied for a TPAP licence before the NPCI in partnership with Yes Bank and Axis Bank
The approval will enable existing partners Axis Bank and Yes Bank to become the payment service providers (PSPs) for Paytm for its UPI channel
The development comes just a day after Yes Bank MD and CEO Prashant Kumar expressed the bank’s willingness to acquire Paytm Payments Bank’s merchants
In the aftermath of the Reserve Bank of India’s (RBI) crackdown on Paytm
Payments Bank, the fintech major’s parent, One97 Communications, has reportedly signed a deal to move its merchant accounts to Yes Bank.
Sources told NDTV Profit that Paytm may have also applied for a third-party application provider (TPAP) licence before the National Payment Corporation of India (NPCI) in partnership with Yes Bank and Axis Bank.
As per the report, the fintech major has already submitted the requisite documents to the payments body. It added that the NPCI is expected to give its nod for the licence soon.
The approval will enable the two banks to become the payment service providers (PSPs) for Paytm for its UPI channel. Sources also reportedly said that, so far, only two banks have been finalised by Paytm despite RBI asking NPCI to facilitate the certification of four or five banks.
Interestingly, the reports of a deal with Yes Bank have come just a day after Yes Bank MD and CEO Prashant Kumar expressed the bank’s willingness to acquire Paytm Payments Bank’s merchants.
The development follows the central bank’s public (February 23) directive to NPCI to examine Paytm’s request to become a TPAP for its UPI offerings. The move will give a major impetus to the bank and will allow it to onboard more merchants and users and leverage cross-selling opportunities in the long term.
Earlier, Yes Bank’s Kumar, however, said that the move would require the bank to complete Know Your Customer (KYC) verification and due diligence.
Paytm Payments Bank has been looking for partnerships with several banks to help its merchants seamlessly continue with Paytm’s offerings. It was recently reported that Paytm was mulling partnerships with Yes Bank, Axis Bank, HDFC Bank, and State Bank of India (SBI) for processing transactions via UPI.
The crisis broke out earlier this year after the RBI announced a slew of curbs on the payments bank and barred it from taking any deposits, credit transactions, or top-ups in any of its customer accounts for “persistent non-compliance and continued material supervisory concerns”.
In addition, the apex bank barred it from offering other banking services, such as UPI facility and fund transfers, after February 29. Earlier this month, it extended the timeline to March 15 for some of the restrictions.
The aftermath saw brokerages trimming their target price for the company and warned of a near-term financial impact on its business.
Paytm shares continue to take a beating on the bourses. Shares of the company closed 0.23% lower at INR 405.20 on the BSE on Thursday (February 29).
