"Based on a review by NPCI on ICICI Bank's action to block UPI transactions made through PhonePe App, NPCI has noted that PhonePe and Flipkart Apps are in contravention of the UPI guidelines of interoperability," the umbrella organisation for all retail payment systems in the country said in a statement.
On Thursday, NPCI had said that it has advised ICICI Bank to 'open UPI transactions' through mobile phone e-wallet.
"We had a discussion with ICICI Bank and YES Bank -- the banker to PhonePe -- to review the matter and arrived at this," NPCI had said in a statement on Thursday.
On its part, ICICI Bank had said on Thursday that a 'non-banking application' followed a restrictive practice of allowing only users of its own UPI handle to make payments on its App.
"This is a clear violation of UPI guidelines which mandate interoperability, wherein users enjoy the freedom to choose any UPI handle to make payments," an ICICI Bank's Spokesperson had said on Thursday.
"NPCI has assured us in writing that this will get corrected very soon and the concerned App will allow interoperability. As soon as this is corrected, ICICI Bank will start allowing UPI transactions to resume on this App."
The national financial service UPI enables bank account holders to send and receive money from their respective smartphones without the need to enter bank account information or net banking details.
The UPI is popularly used to send and receive money from individuals or to pay directly to merchants.
The NPCI was set up in 2009 as the central infrastructure for various retail payment systems in India and was envisaged by the Reserve Bank of India (RBI) as the payment utility for all banks in the country.
The retail payment's umbrella organisation has been trying to promote digital payments through various modes including Cheque Truncation System, National Automated Clearing House (NACH), Aadhaar Enabled Payment System (AePS), Immediate Payment Service (IMPS), UPI and Bharat Interface for Money (BHIM).