FEBRUARY 1,2024 (ozi news desk):
BharatPe co-founder Ashneer Grover expressed his disagreement with the Reserve Bank of India’s (RBI) decision to impose restrictions on Paytm Payments Bank. In response to the RBI’s order for Paytm Payments Bank to cease accepting new deposits in its accounts or popular wallets after February 29, 2024, Mr. Grover argued that this move was detrimental to the interests of fintech firms. He went on to state that this decision had the potential to severely impact the entire sector, ultimately leading to its demise. In light of this, he urged Finance Minister Nirmala Sitharaman and the office of Prime Minister Narendra Modi to intervene and address the issue at hand.Ashneer Grover expressed his confusion and concern regarding the Reserve Bank of India (RBI) and its stance towards fintech companies. He believes that the recent regulations and actions taken by the RBI are unfavorable towards fintechs, which could potentially harm the entire sector. Grover emphasizes the significant role that startups have played in creating market capitalization and employment opportunities in the past decade. He further highlights the current challenges faced by prestigious institutions like IIM and IIT in placing their graduates, suggesting that the country cannot afford such excessive control from regulatory bodies. Grover criticizes the RBI for promoting the Unified Payments Interface (UPI) globally while simultaneously punishing the pioneers in the fintech space, referring to this contradictory behavior as ‘Doglapan’.
Yogesh Dayal, a chief general manager with the central bank, stated in a press statement that Paytm Payments Bank, a subsidiary of Paytm, one of India’s largest payment firms, has been directed by the RBI to cease accepting deposits or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, and other similar instruments after February 29, 2024. The statement clarified that no further deposits, credit transactions, or top-ups will be permitted, except for instances where interest, cashbacks, or refunds are credited to customers. However, the payment bank is still authorized to provide these interest payments, cashbacks, or refunds to customers as required.
The Reserve Bank of India (RBI) has taken further action against Paytm Payments Bank following the release of the Comprehensive System Audit report and subsequent compliance validation report by external auditors. In March 2022, the RBI had already instructed the bank to halt the addition of new customers. However, the audit reports highlighted persistent non-compliance and ongoing supervisory concerns within the bank, prompting the need for additional supervisory measures. The RBI did not disclose specific details regarding the action taken, but it clarified that it was carried out under Section 35A of the Banking Regulation Act, 1949.
