SBI Reaches Out to Merchants Amid Regulatory Action on PayTM Payments Bank

In response to the recent regulatory action taken against PayTM Payments Bank, the State Bank of India (SBI) is extending its support to merchants to ensure the smooth functioning of payment systems, announced Chairman Dinesh Khara. The nation’s largest lender is proactively reaching out to merchants, expressing a willingness to welcome them and even considering a one-time migration of accounts from the affected payments bank.

Khara emphasized SBI’s commitment to preventing disruptions in the payments ecosystem and highlighted the capabilities of SBI Payments, a company supporting various solutions such as point of sale terminals, QR codes, and app-based transactions.

The Reserve Bank of India (RBI) issued an order on Wednesday directing Paytm Payments Bank to halt all basic payment services, including Unified Payments Interface (UPI), IMPS, Aadhaar-enabled payments, and bill payment transactions, effective February 29. The regulatory intervention was prompted by Paytm’s violation of rules, particularly related to know-your-customer (KYC) documents.

While acknowledging a minimal business relationship with PayTM, Khara assured that SBI is open to providing assistance to stabilize the system. However, as of now, there has been no communication from the regulator regarding the matter.

In light of the challenges faced by PayTM Payments Bank, the platform is reportedly in discussions with HDFC Bank, Axis Bank, and Yes Bank to transfer payments and settlements responsibilities. This move comes as Paytm Payments Bank anticipates a halt to most of its banking services after February 29.

This regulatory action marks the third instance of RBI intervention against PayTM, following issues with KYC processes in 2018 and directives in March 2022 barring the onboarding of new customers.