RBI imposes restrictions on Paytm due to non-compliance
PTC News Desk: The Reserve Bank of India (RBI) on Thursday announced that it had taken action against Paytm due to persistent non-compliance with regulations.
RBI Governor Shaktikanta Das addressed the issue during a briefing following the monetary policy committee meeting. He emphasised that entities are given ample time to comply with regulations, and regulatory actions are taken only when necessary. The RBI has imposed significant restrictions on Paytm Payments Bank Ltd (PPBL), directing it to cease accepting deposits or top-ups in customer accounts, wallets, FASTags, and other instruments after February 29.
#WATCH | On Paytm issue, RBI Deputy Governor Swaminathan Janakiraman says, "This is a supervisory action on a regulated entity for persistent non-compliance..." pic.twitter.com/oCbk8UC68j — ANI (@ANI) February 8, 2024
According to an RBI circular, the decision follows audits and compliance validation reports by external auditors, which revealed ongoing non-compliance and supervisory concerns in the bank.
The founders of Paytm have reached out to the RBI governor and the finance minister, urging them to reconsider the regulatory action. Deputy Governor Swaminathan J clarified that the RBI's actions were a result of persistent non-compliance and that appropriate steps would be taken in the future.
RBI Governor Das announced that the RBI would release a set of FAQs next week to address public concerns arising from the Paytm incident. The situation raises questions about the allegations against Paytm, the implications of the RBI's action for Paytm, the fintech sector, and ordinary users, as well as the challenges within the regulatory framework for the digital payments ecosystem.
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Recently, the central bank halted Paytm Payments Bank from receiving new deposits starting February 29. The RBI specified that no further deposits or credit transactions would be permitted in customer accounts, wallets, FASTags, NCMC cards, etc., after this date, except for interest, cashbacks, or refunds.
Customers, however, can withdraw or utilise their balances without restrictions until their available balance. Vijay Shekhar Sharma, Paytm's founder and CEO, met with both the RBI and Finance Minister Nirmala Sitharaman but was reportedly denied concessions by the RBI.
To ensure seamless digital payments, Paytm must transfer accounts to third-party banks after February 29. Sitharaman informed Sharma that regulatory action against his company is beyond government intervention, as per a Mint report.
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(Inputs from agencies)
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