Paytm crisis: Fintech firms not above regulation, says Rajeev Chandrasekhar
Minister for State for Electronics and Information Technology (MeitY) Rajeev Chandrasekhar spoke on the ongoing Paytm crisis on Saturday, saying that being a FinTech company doesn’t absolve anybody from regulatory oversight.
Rajeev Chandrasekhar’s statement comes days after Reserve Bank of India (RBI) cracked down on Paytm Payments Bank for the “complete disregard” of regulatory standards and compliance requirements by a functioning bank.
“A sectoral regulator has an absolute authority to regulate every entity within the sector. The RBI has done so and this is within their purview to do so,” Rajeev Chandrasekhar said on the sidelines of the launch of Digital India Future Labs in New Delhi, reported Moneycontrol.
“Being a FinTech or being a tech company doesn’t absolve anybody from regulatory oversight,” MeitY Chandrasekhar further added.
The Reserve Bank of India has imposed major restrictions on Paytm Payments Bank, saying that the platform cannot accept fresh deposits and do credit transactions after February 29, 2024. Paytm, however, is working on its representation in the case to extend this deadline.
RBI in its investigation said that there are major irregularities in the KYC of many Paytm Payments Bank customers, posing serious risk of data manhandling and money laundering.
The risk pertained the the absence of KYC for a large number of Paytm Bank users, estimated to be in lakhs, causing a serious violation of RBI provisions. Now, speculations are rife that after the February 29 deadline, Paytm Payment Bank may face permanent suspension.
Paytm app to function normally
While Paytm Payments Bank can face a temporary or permanent suspension after the February 29 deadline, company founder Vijay Shekhar Sharma has confirmed that Paytm app will continue to function normally even after this deadline.
Sharma posted on X, “To every Paytmer, Your favourite app is working, will keep working beyond 29 February as usual. I with every Paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance. India will keep winning global accolades in payment innovation and inclusion in financial services – with PaytmKaro as the biggest champion of it.”
Paytm Payments Bank operates as a restricted bank that can take deposits but cannot lend. Billionaire Vijay Shekhar Sharma owns 51% stake of the bank and Paytm parent One 97 Communications Ltd. holds the rest.