Reserve Bank of India (RBI) Governor Shaktikanta Das addressed criticisms regarding the central bank's actions against Paytm Payments Bank (PPBL) in a recent interview with ET Now television channel. Das said that the measures were targeted solely at a regulated entity, not against the fintech industry as a whole.
According to ET Now interview, Das clarified, "The RBI’s action was against a regulated entity. It was not against any fintech company. I fail to understand why a narrative is built that RBI has acted against a fintech company. In this case (PPBL), the action is against Payments bank. I am not being defensive."
Highlighting the RBI's supportive stance toward fintechs, Das pointed out the central bank's initiatives such as the establishment of a dedicated fintech department and other measures aimed at fostering the growth of the fintech industry. "We have done nothing so far as far as fintechs are concerned. The RBI remains fully supportive of fintechs. RBI is all for fintechs," he affirmed.
Addressing concerns regarding KYC compliance, Das noted that while fintechs provide third-party services, the responsibility to carry out KYC and adhere to regulations ultimately rests with the banks. "In the financial sector, there are rules of the game. Our endeavour is to ensure there are no major accidents," Das added.
The governor’s remarks come amidst criticisms from certain quarters of the fintech industry, suggesting that the RBI's actions are detrimental to the thriving of fintech firms. Responding to these criticisms, Das indicated that the deadline of March 15 for PPBL customers to transition their accounts and wallets to other banks is sufficient, hinting at an unlikely extension.
He also addressed concerns regarding the fate of Paytm's application for a third-party application license for UPI transactions, stating, "We have said we have no objection if NPCI decides (to permit Paytm). Our action was against the bank, not the app."
The RBI had imposed business restrictions on PPBL on January 31, including a ban on accepting fresh deposits and undertaking credit transactions after February 29. This move came after the regulator found major irregularities in KYC compliance, posing risks to customers, depositors, and wallet holders. PPBL was also barred from taking on new customers on March 11, 2022, for violating KYC norms.
Despite criticisms, the RBI remains steadfast in its commitment to regulatory compliance and ensuring the stability of the financial sector while supporting the growth of the fintech industry