India’s troubled Paytm is set to collaborate with Axis Bank, HDFC Bank, State Bank of India, and Yes Bank to process transactions using the popular unified payments interface (UPI), according to two persons familiar with the matter.
The central bank has directed Paytm Payments Bank, Paytm's banking unit, to cease operations by March 15, causing inconvenience to the popular payment service.
UPI is India's real-time payments system, managed by the National Payments Corporation of India (NPCI), that enables users to transfer funds between banks.
The Reserve Bank of India (RBI) urged the NPCI last week to look at Paytm's request to become a third-party application provider and to allow four to five banks to act as service providers for it.
"Talks to onboard banking partners are on, and Paytm wants to start this process with large banks that have the technological bandwidth to handle large volumes seamlessly," a source with knowledge of the matter said.
The individuals did not wish to be recognized since they are not authorized to communicate with the media. HDFC Bank, Yes Bank, SBI, and Paytm did not immediately answer to Reuters' emails for comment. Representatives from Axis Bank and NPCI declined to comment.
"Paytm is likely to onboard Axis Bank as a banking partner first, and then rope in more banks," a second person told Reuters.
The NPCI will inspect the bank's technology and related facilities over the course of about a month, according to sources.
According to data on the NPCI website, Paytm is the country's third-largest UPI payment app, conducting 1.6 billion transactions every month. PhonePe and Google Pay are the two biggest. According to the second person, Paytm users would migrate to the partner bank's revised UPI handle.
"Any business with Paytm will only take place in accordance with RBI regulatory orders," Yes Bank's CEO, Prashant Kumar, stated in an earlier interview on Monday.
"If there is clarity on the risks involved and if the business makes commercial sense to us, we have the capabilities."
