The Reserve Bank of India’s Governor Shaktikanta Das while announcing the Monetary Policy Committee’s decision today listed what is key for financial intuitions to adhere for safety of the country’s financial system as well as individual institutions.
“Good governance, robust risk management, sound compliance culture and protection of customers’ interest are of paramount importance for the safety and stability of the financial system and individual institutions,” Das said.
The Reserve Bank of India lays great emphasis on these aspects, the RBI governor said, adding that the central bank expects all regulated entities to accord the highest priority to these functions.
The comments close on the heels of Paytm crisis.
Paytm Payments Bank is facing an uncertain future due to strict regulatory actions and as the Reserve Bank of India issued a notice on January 31 the payments bank arm of Paytm from providing banking services after February 29, citing compliance issues.
The Reserve Bank of India (RBI) has instructed the bank to stop providing most of its banking services after February 29 and advised users to move their funds to other institutions. This could lead to Paytm experiencing a financial impact of Rs 300-500 crore on its yearly earnings. Moreover, Paytm commands a big market share and has an enormous user base that makes the threat to the payments bank an imminent uncertainty for many.
The disciplinary action is seen as unprecedented for the financial services industry, and will affect the app’s users as well as the wider merchant community that uses the Paytm network for payment processing, wage disbursals and other quasi-banking functions.
Meanwhile, Paytm CEO and Founder Vijay Shekhar Sharma met RBI officials and Finance Minister Nirmala Sitharaman. In the meeting with the FM, Sharma explained the company’s position with regard to the various issues flagged by RBI. Sitharaman is understood to have impressed upon Sharma the need to discuss the matter with the RBI and sort out the non-compliances that have been flagged, ET reported on February 7.
One 97 Communications shares were trading at Rs 463.70, down 6.56 per cent as of 11.30 am on Thursday. As of February 5, the stock had lost 42.4 per cent of its value or Rs 20,500 crore in market capitalisation.