Shaktikanta Das :RBI’s Paytm Order Targets Regulated Entity
During an interview with ET Now television channel on March 6, Das expressed bewilderment at the narrative framing the RBI’s actions as anti-fintech. Emphasizing the specificity of the action, he underscored that it was directed at Payments bank and not the broader fintech sector. Das asserted, “I am not being defensive.”
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Regarding the transition for PPBL customers, Das stated that the provided time until March 15 to shift accounts and wallets to other banks is ample, hinting at an unlikely extension of the deadline. In a proactive message, he urged Paytm payments app users to link their accounts to another bank by the specified date.
Moreover, Das highlighted that the National Payments Corporation of India (NPCI) would review Paytm’s application for the third-party application license for Unified Payments Interface (UPI) transactions. This adds a layer of anticipation for Paytm’s future interactions within the UPI ecosystem.
Reserve Bank of India (RBI) Governor Shaktikanta Das reiterated that the RBI’s action against Paytm Payments Bank (PPBL) was specifically directed at the bank and not the application itself. Emphasizing the regulatory framework in the financial sector, Das clarified that the central bank has no objection if the National Payments Corporation of India (NPCI) decides to permit Paytm.
Das highlighted the RBI’s commitment to fostering the fintech industry, mentioning initiatives such as the creation of a dedicated fintech department. He stressed the importance of adhering to established rules in the financial sector to prevent major disruptions.
On January 31, the RBI imposed operational restrictions on PPBL due to non-compliance issues and significant supervisory concerns. The restrictions included a ban on further deposits and top-ups, as well as credit transactions in customer accounts.
In terms of economic outlook, Das expressed optimism, stating that India’s economy is likely to grow faster than the government’s prediction. Citing high-frequency indicators, he suggested a possibility of surpassing the government’s projected 7.6 percent growth for the current fiscal year, potentially reaching close to eight percent. This follows the government’s upward revision of its full-year projection after robust growth in the last quarter of 2023. The RBI, in its forecast, anticipates seven percent growth for the upcoming fiscal year, positioning India as one of the fastest-expanding economies globally.
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Reserve Bank of India (RBI) Governor Shaktikanta Das affirmed the robust momentum of economic activity in the current year, highlighting strong urban demand, substantial investment activity, and signs of rural demand revival. He noted that private investment is on the rise, and capacity usage remains high.
Addressing the Paytm Payments Bank (PPBL) situation, Das clarified that the RBI’s action was specifically against a regulated entity and not fintech companies in general. He assured that 80-85% of Paytm wallet users would not experience disruptions due to the regulatory measures. For the remaining users, the governor advised linking their apps to other banks by the stipulated deadline of March 15.
Das emphasized the RBI’s support for the fintech sector, stating, “RBI is and remains fully supportive of Fintech…RBI is all for Fintech to grow.” He likened the situation to owning and driving a Ferrari, noting that adherence to regulatory rules is crucial to avoid accidents. The governor expressed confidence that the March 15 deadline provides sufficient time, indicating no need for further extension.
When queried about the timeline for NPCI’s decision on the fate of Paytm payment app license, RBI Governor Shaktikanta Das clarified that the RBI has communicated to NPCI that they have no objection to considering the continuation of the Paytm payment app. Stressing that the RBI’s action was against the Paytm Payments Bank, Das explained that the app falls under NPCI’s jurisdiction, and they are expected to make a decision soon. Additionally, Paytm Payments Bank is facing a ₹5.49 crore fine from the Financial Intelligence Unit (FIU) for alleged money laundering, citing the bank’s failure to establish an internal mechanism for detecting and reporting suspicious transactions as required by anti-money laundering laws.
