State Bank of India reportedly teams up with Paytm for its UPI operations

The State Bank of India (SBI) has forged an alliance with One97 Communications, the parent company of Paytm, to facilitate its UPI payments amidst the impending deadline set by the Reserve Bank of India (RBI) for Paytm Payments Bank Limited (PPBL). 

With the RBI imposing business restrictions on the payments bank, limiting its operations beyond March 15, SBI's collaboration with Paytm emerges as a strategic move to ensure uninterrupted service. According to an Economic Times report, four banks, including Yes Bank, Axis Bank, HDFC Bank, and the State Bank of India, will support Paytm's consumer-facing UPI payments.

A source familiar with the matter, as cited in the report, stated, "They will be issued fresh handles from the back-end, and eventually customers will be migrated to each of the four banks in such a way that there is no extra pressure on any one entity." This strategic distribution aims to distribute the operational load evenly among the supporting banks.

In a filing to the Bombay Stock Exchange (BSE) on February 20, Paytm revealed the transition of its nodal accounts to Axis Bank to facilitate UPI payments made by consumers to its merchants through QR codes. This manoeuvre is designed to ensure continuity in digital payment acceptance for merchants associated with Paytm even after the March 15 deadline.

Amidst these developments, the National Payments Corporation of India (NPCI) is expected to grant a third-party application provider (TPAP) license to Paytm by March 15. A source familiar with the matter, as reported by Reuters, stated, "The TPAP license approval will come before March 15, and most of the checks have been completed. 
While the integration with banks may take more than a month, the license approval should be in place before the deadline ends." This approval is anticipated to pave the way for Paytm to continue its operations seamlessly beyond the stipulated deadline.