Tuesday, March 5, 2024

RBI says no systemic worries, action on Paytm due to “persisted non-compliance”

A QR code for the Paytm digital payment system at a road side stall in Mumbai.

A QR code for the Paytm digital payment system at a road side stall in Mumbai.
| Photo Credit: EMMANUAL YOGINI

Reserve Bank Governor Shaktikanta Das on Thursday said there are no systemic worries and the action on Paytm was driven by a “lack of compliance” at Paytm.

Deputy Governor Swaminathan J. said the actions against the fintech have been taken due to “persisted non-compliance”.

The Governor declined to specify the specific shortcomings resulting in the RBI action, but made it clear that it is driven by a “lack of compliance” at Paytm.

Stressing that the Reserve Bank of India (RBI) is a responsible regulator, Das asked why should the central bank act against a regulated entity if it has complied with all the requirements.

The RBI works with entities on a bilateral basis, nudges them to comply by giving sufficient time, and imposes business restrictions or supervisory actions only when the entity does not take necessary actions, Das said.

“When constructive engagement doesn’t work or when the regulated entity does not take effective action, we go for imposing business restrictions,” Das said, adding that the actions are “proportionate” to the gravity of the situation.

The actions are driven by systemic stability or protection of depositor or customers’ interests, he added.

The Governor also affirmed the Reserve Bank’s commitment to support innovation in the financial sector, saying there should not be “any doubt” around it.

Acknowledging that the RBI has received feedback from the wider public, Das said the RBI will be coming out with a set of FAQ (frequently asked questions) to assuage the concerns.

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