'NPCI advised UPI payment apps to have multi-bank approach in 2017'

After the impact on payments systems following moratorium on Yes Bank, the National Payments Council of India (NPCI) on Monday said it had in 2017 advised third-party apps to have a multi-bank approach.

PhonePe's exclusive reliance on Yes Bank to act as its payments partner had resulted in the popular app being unable to render Unified Payment Interface (UPI) transactions for a day last week.

"NPCI has been a proponent of the multi-bank model, to ensure full resilience of the ecosystem... In September 2017, NPCI advised large UPI payment app providers for a multi-bank approach," an official statement said.

It added that there are already few payment apps operating on the multi-bank model and some of them are in the final phases of migration.

Following the service outage, PhonePe switched to ICICI Bank and was able to restart its UPI services late on Saturday.

Meanwhile, NPCI, whose role has been welcomed by both ICICI Bank and PhonePe for the help, also appreciated the efforts undertaken by the system for showing the "highest sense of the consumer first approach".

NPCI said the last-leg payment service providers also prefer to work with multiple parties to ensure high availability of payment systems, and where required, the payment providers identified alternative partner banks who quickly stepped in to address contingency requirements.

The Reserve Bank of India (RBI)-promoted body said payment systems have had "minimal disruption" and non-Yes Bank customers can make payments for all their daily requirements.

The difficulties to the system had also come at a time when the RBI is mulling to open up the role played by NPCI to private parties because of concerns over concentration risk.