ET Explainer: why NPCI nod for Paytm UPI onboarding matters
Paytm, operated by One 97 Communications, received approval from the National Payments Corporation of India (NPCI) to onboard new UPI users, lifting a regulatory freeze imposed on it earlier this year. This approval marks a significant development for the digital payments platform, which has been under scrutiny by regulators.
Why was Paytm barred?
In February 2024, NPCI restricted Paytm Payments Bank (PPBL), an associate entity of Paytm, from offering basic banking services citing compliance issues. This resulted in PPBL being barred from adding new users onto its UPI service. Eventually UPI payments moved from PPBL to Paytm where the latter became a third-party payment app. But the new user addition embargo was not lifted, and the application had been pending with the NPCI.
How did Paytm get approval?
One 97 Communications submitted a formal request to NPCI on August 1, asking for permission to resume onboarding of new UPI users. In the meantime, Paytm migrated around 135 million UPI users to its four new partner banks for UPI payments. After conducting a review of Paytm's compliance with NPCI guidelines, including risk management, customer data protection and multi-bank support protocols, NPCI gave approval on Tuesday.
What are the conditions?
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