After curbing fintech company Paytm’s banking unit’s operations, the Reserve Bank of India’s governor Shaktikanta Das has said there is “hardly any room for review”.
Talking to reporters in Delhi on Monday, Das said there was “hardly any room” to review the action taken against Paytm Payments Bank.
Das said that RBI takes action against regulated entities only after a comprehensive assessment. He reiterated that the central bank will be issuing a set of FAQs (Frequently Asked Questions) on the Paytm matter this week.
Addressing the issue during the February policy outcome announcement, the central bank said that it took the actions due to persistent non-compliance by Vijay Shekhar Sharma-run fintech company.
Paytm Payments Bank is the regulated banking entity that accepts the deposits for the Paytm users to then make transactions on the app. The Patym app’s real-time payment interface falls under the RBI regulations.
The RBI has barred Paytm users from depositing any money in Paytm Payments Bank after February 29. The banking regulator is considering scrapping the bank’s license as early as March, news agency Bloomberg reported earlier.
When constructive engagement doesn’t work or when the regulated entity does not take effective action, we go for imposing business restrictions. Actions are proportionate to the gravity of the situation.Das on Feb 8
Paytm, supported by SoftBank Group Corp., has been under regulatory scrutiny for an extended period, receiving multiple warnings over the past two years regarding questionable transactions between its banking subsidiary and its widely-used payments application.“Our emphasis is always on bilateral engagement with the regulated entities with a focus on nudging them for corrective action,” Governor Das said during MPC’s outcome announcement. “And sufficient time is given for undertaking such corrective action. When such constructive engagement does not work or when the regulated entity does not take effective action, we go for imposing supervisory or business restrictions.”
Without specifying the nature of the measures, RBI’s Deputy Governor Swaminathan J said “suitable steps” will be taken to ensure that customer inconvenience, if any, is minimised.
To shore up investor confidence, the company last week announced the setting up of a committee to boost compliance. The advisory committee will be headed by former Securities Exchange Board of India (SEBI) head Meleveetil Damodaran, Paytm parent One97 Communications Ltd. said in a filing Friday. The three-member committee features the former head of a prominent chartered accountant body and the ex-chairman of a state-run bank.
Earlier on Monday, the company confirmed that its Independent Director Manju Agrawal left the company on February 1.
