In light of ongoing challenges faced by leading fintech firm Paytm, Finance Minister Nirmala Sitharaman has scheduled a meeting with heads of financial technology companies next week to urge strict adherence to regulatory norms.
Paytm Payments Bank Ltd, backed by One97 Communications Ltd, has encountered regulatory actions from the Reserve Bank due to non-compliance with various regulatory requirements, including Know Your Customer (KYC) guidelines.
According to sources, Sitharaman intends to convene with CEOs of fintech firms to address their concerns and challenges. However, she will emphasize the importance of adhering to regulatory norms, especially considering their handling of individuals’ finances.
The meeting is anticipated to include participation from senior officials of the Reserve Bank, finance ministry, Department for Promotion of Industry and Internal Trade, among others.
Last week, the RBI advised customers and merchants of Paytm Payments Bank Ltd (PPBL) to transfer their accounts to other banks by March 15, extending the previous deadline of February 29, 2024, by 15 days. This extension was granted to ensure customers, including merchants, have sufficient time to make alternative arrangements.
Additionally, the RBI directed the termination of ‘nodal accounts’ of One97 Communications Ltd, the parent company of Paytm. Although One97 Communications holds a 49 percent stake in PPBL, it categorizes PPBL as an associate rather than a subsidiary.
Reserve Bank Governor Shaktikanta Das affirmed the central bank’s support for the fintech sector, ensuring its rapid growth. Furthermore, Financial Services Secretary Vivek Joshi emphasized the importance of fintech firms complying with regulations, highlighting the principle of responsibility that accompanies their scale.
