PayTM (One 97 Communications Ltd)

Hi. In 2020, PhonePe went down because Yes Bank went down. Yes Bank used to be the sponsor bank for all UPI handles which were issued by PhonePe. For example if you went to PhonePe and linked your bank account you got a UPI handle which ended with @yesbank.

Now when Yes Bank went down, suddenly as a customer of PhonePe you could not make any transactions from the PhonePe app because the sponsor bank of your UPI handle was not working. So PhonePe spoke to NPCI and other banks. Within a day or so PhonePe got ICICI Bank as the sponsor bank. All UPI handles which ended with @yesbank were routed by NPCI towards ICICI. What do I mean by that? It is not as if your UPI handle on PhonePe app changed from @yesbank immediately. But whenever you wanted to do a UPI transaction on PhonePe, the sponsor bank at the backend whose servers were helping you complete the UPI transaction was ICICI.

Now ICICI could not have done KYC for crores of UPI customers of PhonePe overnight. I want to learn from this group why would the NPCI and RBI not allow the same thing for Paytm. Why would in Paytm’s case the new sponsor bank or banks be first asked to complete KYC for all the UPI handles? That is a major point which Suresh wasn’t asked. May be I am missing something.

Here are a few articles about what happened at the time of Yes Bank going down.