by The RBI stated that after allowing the business enough time to address its non-compliance issues, the decision was made to prohibit Paytm Payments Bank from taking new deposits.The Reserve Bank of India (RBI) has provided an explanation for the recent measures it took against Paytm Payments Bank, indicating that the bank disregarded numerous warnings and failed to abide by the rules, which led to the crackdown.
After allowing the business enough time to address its non-compliance issues, the decision was made to prohibit Paytm Payments Bank from taking new deposits, according to news agency Reuters.According to senior RBI officials referenced in the report, the RBI raised concerns about supervisory issues and regulatory rule violations.
RBI Governor’s statement
Speaking at a press conference after a monetary policy review, RBI Governor Shaktikanta Das explained that regulated entities are given enough time to fulfil regulatory requirements.According to him, the RBI encourages businesses to take corrective action by having positive conversations with them about compliance-related issues. But in the event that these initiatives fail, the RBI turns to enforcing business or supervisory limitations.
Das reaffirmed that the RBI is an accountable regulator and that it would not have intervened if all legal requirements had been met.
Concerns over unidentified accounts
Concerns have also been raised about hundreds of thousands of accounts at Paytm Payments Bank being opened without the required documentation.There are rumours that Paytm’s licence may be revoked as a result of the regulatory crackdown.With 330 million digital wallet accounts, Paytm is a popular choice for a variety of financial transactions in India. Concerns about disruptions to digital payments have been raised by the central bank’s directive to prohibit new deposits into Paytm Payments Bank.
A Paytm representative stated, “We assure our users and merchant partners that the Paytm app remains fully operational, and our services are unaffected.” The company is also speeding up partnerships with banks to provide uninterrupted services.
RBI’s assurance on customer convenience
Deputy Governor Swaminathan J of the RBI responded to questions regarding customer inconvenience by saying that appropriate steps would be taken to minimise any disruptions. Nevertheless, no precise information regarding these actions was givenThe management of Paytm has declared that it will work with other banks to make sure that its digital payment app stays operational.But Swaminathan emphasised that before partnering banks entered into any agreements with Paytm, they would have to do their own due diligence.
Paytm’s shares saw a drop in response to the RBI’s remarks, going from rising by 6% on the National Stock Exchange to 10% lower in the afternoon session.The RBI has indicated that it will release further clarifications regarding the Paytm Payments Bank order in the form of frequently asked questions (FAQs) in the coming week.
