RBI’s clampdown on Paytm Payments Bank for persistent non-compliance prompts concerns. Governor Shaktikanta Das stresses regulatory adherence while Deputy Governor Swaminathan J warns of further action.
New Delhi, February 08, 2024: In a stern move, the Reserve Bank of India (RBI) has taken action against Paytm Payments Bank, citing persistent non-compliance with regulatory standards. RBI Governor Shaktikanta Das, addressing the issue during a briefing after the monetary policy committee meeting, emphasized that entities are given ample time for compliance. “If they would comply, why would a regulator like us have to take action?” he questioned.
Deputy Governor Swaminathan J clarified that the action is a supervisory measure against a regulated entity for continuous non-compliance. He added that the central bank will take further steps as necessary to address the situation.
In response to public concerns arising from the Paytm action, Governor Das announced that RBI would release a set of Frequently Asked Questions (FAQs) next week to provide clarity on the matter.
Last week, RBI had prohibited Paytm Payments Bank from accepting new deposits starting February 29. The directive also restricted any further deposits or credit transactions after the specified date, except for interest, cashbacks, or refunds. However, customers are allowed to withdraw or utilize balances from their accounts without any restrictions up to their available balance.
Vijay Shekhar Sharma, the founder and CEO of Paytm, had discussions with both RBI officials and Finance Minister Nirmala Sitharaman. Despite the meetings, reports suggest that RBI declined to grant concessions to the payment service provider.
Following the regulatory action, Paytm will need to transfer accounts to third-party banks to ensure the seamless functioning of digital payments beyond February 29.
According to reports from Mint, Finance Minister Sitharaman reiterated to Paytm’s founder that the action taken against his company is part of a regulatory process, indicating that the government cannot intervene on behalf of the company.