After the Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank, BharatPe co-founder Ashneer Grover said that the central bank’s move was against the interest of fintech firms. The RBI on Wednesday ordered Paytm Payments Bank to stop accepting fresh deposits in its accounts or popular wallets after February 29, 2024. Following this, Mr Grover declared the move to be against all Fintech firms and said that the decision will kill the sector altogether. He also called upon Finance Minister Nirmala Sitharaman and Prime Minister Narendra Modi’s office to look into the matter.
“I don’t understand RBI. Clearly, RBI does not want fintechs in business. Of late all regulations/moves are against Fintechs. Such moves will kill the sector altogether,” Ashneer Grover wrote on X. “Startups have been the biggest creators of market cap and employment in the last decade. Today IIM and IIT are struggling to place people — we as a country cannot afford such overreach! Tom-tom-ing UPI to the world and punishing pioneers in space is pure ‘Doglapan’!” he added.
I don’t understand RBI. Clearly RBI does not want FinTechs in business – of late all regulations / moves are against Fintechs. Such moves will kill the sector altogether. The @FinMinIndia@nsitharaman@PMOIndia need to step in. Startups have been biggest creators of market cap…
— Ashneer Grover (@Ashneer_Grover) January 31, 2024
Notably, RBI directed Paytm Payments Bank, which is part of one of India’s largest payment firms Paytm, to to stop accepting deposits or top-ups in any customer accounts, wallets, FASTTags and other instruments after February 29.
“No further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime,” Yogesh Dayal, a chief general manager with the central bank, said in a press statement. However, the statement added that payment bank is allowed to credit interest, cashback, or refunds to customers at times.
Also Read | Curbs On Paytm Payments Bank Services: What Happens To Your Money Now
The latest move by the RBI comes after the Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and warranted further action.
The RBI said it had in March 2022 asked the Paytm Payments Bank to stop adding new customers. However, a Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and continued material supervisory concerns in the bank, warranting further supervisory action, the RBI said, without disclosing details. The action against Paytm Payments Bank was taken under Section 35A of the Banking Regulation Act, 1949, the central bank added.