Update: After an outage that lasted for well over 24 hours, PhonePe services are now full up, the company restored the services in phases, making wallets and shopping platform available first, and then UPI.
Use your Debit & Credit cards and PhonePe Wallet to make payments now on #PhonePe. pic.twitter.com/ngB5Hefq0c
— PhonePe (@PhonePe_) March 6, 2020
Previously:
India-based UPI-powered digital payments platform PhonePe, along with several other popular services, suffered an outage after its banking partner Yes Bank, the fourth-largest lender in the country, was placed under moratorium by the Reserve Bank of India.
The move, which went effective from 6 pm on Thursday, followed after months of unsuccessful attempts by the bank to raise capital to improve its financials. As Yes Bank was unable to raise sufficient equity to maintain the viability of its banking business, RBI decided to intervene.
“RBI came to the conclusion that in the absence of a credible revival plan, and in public interest and the interest of the bank’s depositors, it had no alternative, but to apply to the Central Government for imposing a moratorium,” the Central bank said in a public notification.
Sameer Nigam, founder, and chief executive officer of PhonePe, in a tweet sent out on Friday morning, said that they were working on the issue and expressed his optimism for the earliest resumption of services.
“We sincerely regret the long outage. Our partner bank Yes Bank was placed under moratorium by RBI. Entire team’s been working all night to get services back up as soon as possible,” he said.
Finance Minister Nirmala Sitharaman in a press conference on Friday spoke about the issue, informing. She discussed the matter with the RBI governor and was assured of the problem to be solved at the earliest while also pacifying the customers that their money was safe. While announcing a slew of measures to mitigate the issue, she also informed the matter was not something new and that RBI was monitoring the situation of the bank since 2017.
On Thursday evening, RBI had placed restrictions on cash withdrawal for Yes Bank customers capping withdrawals for depositors at Rs 50,000. RBI superseded the Yes Bank board and appointed Prashant Kumar, former SBI CFO, as the administrator of the bank. The RBI stated that it is satisfied that it must issue certain directions to Yes Bank to protect the interest of the depositors. The apex bank also informed on Friday that SBI had shown willingness to acquire a 49% stake in Yes Bank.
It is pertinent to mention that Yes Bank had exposure to the stressed Anil Ambani Group, Essel Group, Vodafone, DHFL and IL&FS since prior to 2014. As a result, the financial stability of the bank was compromised.
Yes Bank has been a pioneer in the UPI ecosystem in the country, enabling startups through its YES Fintech initiative. As a matter of fact, the bank surpassed all leading private banks in UPI transactions, contributing more than 39% of it in January this year. It processed 514 million transactions out of 1.3 billion UPI transactions in that month.
