Digital payments firm Paytm’s share price surged by 5 per cent in early trade to hit an upper circuit on Monday morning. Shares of Paytm’s parent company, One97 Communications Limited, were trading 5 per cent higher on the Bombay Stock Exchange (BSE) at Rs 428.10 apiece.
This comes after the Reserve Bank of India (RBI) advised the National Payments Corporation of India (NPCI) to examine Paytm’s request to become a third-party application provider for unified payments interface (UPI) payments.
“NPCI has been advised by the RBI to examine the request of One97 Communication (OCL) to become a third-party application provider (TPAP) for UPI channel for continued UPI operation of the Paytm app, as per the norms,” RBI said in its statement.
If approved, this would allow Paytm to continue processing payments via UPI, but will need a set of newly identified banks to back the app.
However, Paytm Payments Bank Limited (PPBL) faces restrictions from the RBI.
After March 15, 2024, PPBL won’t be able to accept further credits into its accounts and wallets.
The RBI issued this directive to ensure smooth digital payments using Paytm’s UPI handle (@paytm) and to minimize risks in the UPI system.
One 97 Communication, which owns the Paytm brand, holds a 49% stake in Paytm Payments Bank Ltd.
According to the RBI, the directive has been issued to ensure seamless digital payments by UPI customers using ‘@paytm’ handle (operated by the Paytm Payments Bank) and minimise concentration risk in the UPI system.
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