Entrepreneurs and companies should comply with the rules and laws, irrespective of their size, scale and growth momentum, minister of state for electronics and technology Rajeev Chandrasekhar said on Monday.
“I have seen entrepreneurs beginning to trespass because the momentum of entrepreneurship takes them beyond what the regulators have allowed them to do at that particular point in time… even if you are a hard-charging, successful, innovative entrepreneur, you cannot live in denial of the reality that there are rules and laws that have to be complied with, and that applies to big companies, small companies, startups, legacy,” he said at the Mumbai Tech Week.
This was in response to a question about regulatory hurdles faced by leading Indian startups, including Byju’s, Dream11 and Paytm, among others.
On the Paytm saga
Addressing the recent regulatory changes in the fintech ecosystem without naming Paytm Payments Bank, Chandrasekhar said that financial regulators must establish boundaries to ensure the transactions are legit. He also underscored the importance of discipline and rigour in navigating the challenges of growth.
“A financial regulator will always look at harms like money laundering, know your customer (KYC), and the need to identify every transaction and make sure the transaction is legit. So, there is always going to be some sort of a boundary that a financial sector regulator will set Otherwise, you will have what we saw in the US during the housing bubble meltdown,” Chandrasekhar said.
Also read | PhonePe anticipates increased market share: CEO Sameer Nigam on RBI action against Paytm
Byju’s tried to ‘grow too fast’
He cited troubled edtech firm Byju’s as an example of a company that expanded rapidly without establishing necessary corporate discipline.
“If you look at Byju’s… that is certainly somebody who tried to grow too fast and move without really creating the rigour, the corporate discipline that a growth company (needs). This was at a time when money was flowing and it seemed that equity was cheap. I believe equity is never cheap; even if there is a pipe that seems to be gushing full of capital for you, it is something that will slow down eventually, and that cycle always naturally turns. So, if you are not smart at that time, and if you have not learned from your peers, or learned from folks who came before you, you will make mistakes, and I think Byju’s is that mistake,” he said.
Also read | Govt bullish on online gaming sector: MoS IT Rajeev Chandrasekhar
Bullish on online gaming
Discussing the gaming sector in India, Chandrasekhar expressed optimism and support for the industry. He highlighted the need for a regulatory framework that distinguishes safe and trustworthy gaming from illegal activities such as betting and money laundering.
“I am a big bullish supporter of gaming, Prime Minister Narendra Modi is an absolute believer that this is a very important segment of our digital economy that needs encouragement, needs support. The gaming (industry) is so mixed up, perception-wise, with all of the other bad actors in that segment of real money, which is betting, and money laundering,” he said.
The minister encouraged entrepreneurs in the gaming sector to remain resilient. “I would tell all entrepreneurs to keep the faith. We created a beautiful framework; unfortunately, both self-regulatory body proposals that we got had too much of an industry component to them, and we don’t want this to be an industry grab on regulation, and we would like this to be as independent from government, and independent from the industry as much as possible,” he said.
