SUMMARY
Financial services secretary Vivek Joshi said that the RBI had imposed curbs in the interest of consumer protection
Joshi said that the company did not comply with the regulator’s requirements, adding that the companies will have to abide by all the compliance and follow the laws of the land
The RBI clamped down on Paytm Payments Bank on January 31, 2023, barring it from taking any deposits or credit transactions or top-ups in any of its customer accounts
The Reserve Bank of India (RBI) is likely to issue a clarification on the ongoing Paytm crisis considering the fintech major’s massive user base.
Financial services secretary Vivek Joshi told ET that the RBI had imposed curbs in the interest of consumer protection.
Joshi said that the company did not comply with the regulator’s requirements, adding that the companies will have to abide by all the compliance and follow the laws of the land.
The financial services secretary’s remark comes a day after the enforcement directorate and financial intelligence unit asked the RBI to share its report on the recent action against Paytm Payments Bank.
The RBI clamped down on Paytm Payments Bank on January 31, 2023, barring it from taking any deposits or credit transactions or top-ups in any of its customer accounts. The central bank also stopped Paytm Payments Bank from providing any other banking services, such as UPI facility and fund transfers, after February 29, 2024.
Amid the crisis at Paytm, the fintech giant’s shares closed over 3% higher on the BSE on Tuesday (February 6) after hitting the lower circuit for three consecutive sessions.
The Vijay Shekhar Sharma-led company’s shares jumped nearly 8% intraday to reach a high of INR 472.50. However, the stock gave up some of the gains to end the session 3.02% higher at INR 451.60.
The shares of the company hit the lower circuit of 20% on the exchanges on February 1 and 2. Following this, the BSE and the NSE halved the lower circuit limit for the stock to 10%. Shares of Paytm were locked in the 10% lower circuit on Monday (February 5).
Sharma reportedly met finance minister Nirmala Sitharaman on Tuesday (February 6) amid the crisis at the fintech giant following the RBI’s restrictions on Paytm Payments Bank.
According to CNBC-TV18, the meeting between FM Sitharaman and Sharma lasted for nearly 10 minutes and largely centred around the central bank’s recent directives. Sources told The Hindu businessline that Sharma explained his position during the meeting but was directed to approach the RBI to ‘sort out the matter’.
This comes barely a day after the Paytm founder met officials of the RBI to discuss the latter’s regulatory concerns about Paytm Payments Bank. The company is said to have sought an extension to the current deadline of February 29 and more clarity on the transfer of its licence for the wallets business.
Meanwhile, a clutch of Indian startup founders shot off a letter to Prime Minister Narendra Modi, FM Sitharaman and RBI governor Shaktikanta Das, calling for the review and reconsideration of the directives on Paytm Payments Bank.
Signed by Bharat Matrimony’s Murugavel Janakiraman, Ritesh Malik of Innov8, PB Fintech’s Yashish Dahiya, and Rajesh Magow of MakeMyTrip, the letter urged the Centre to engage in constructive dialogue with the fintech ecosystem.
