On Monday, Reserve Bank of India Governor Shaktikanta Das stated there was “hardly any room” to evaluate the motion taken in opposition to Paytm Payments Bank. He additionally stated that RBI takes motion in opposition to regulated entities solely after a complete evaluation.
While emphasising that RBI is supportive of the fintech sector, Das stated it’s also dedicated to defending the curiosity of consumers in addition to making certain monetary stability.
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Paytm FAQs
To tackle varied points of consumers of beleaguered Paytm Payments Bank (PPBL), the Reserve Bank will difficulty a set of FAQs (Frequently Asked Questions) this week.
“Wait for FAQ that will have a set of clarifications related to customers of PPBL as our priority is customers should not be inconvenienced. Customer interest and depositors interest is uppermost for us,” Das stated after the Finance Minister’s customary tackle to the central financial institution’s board.
In a significant motion in opposition to PPBL, RBI, on January 31, directed it to cease accepting deposits or high-ups in any buyer accounts, wallets, FASTags and different devices after February 29.
Asked if the deadline of February 29 can be prolonged, Das stated, “Wait for the FAQ.”
“Don’t expect review of RBI’s decision in FAQ. FAQ will address issues related with depositors, customers, wallet users, FASTag holders. Whatever is in the customers’ interest that we are dealing in FAQ,” he stated.
Persistent Non-compliance
Persistent non-compliance by Paytm with the regulatory pointers regardless of nudges over a while in the end led to stern motion in opposition to the fintech, the RBI stated and likewise made it clear that there are not any systemic worries.
Without disclosing particular particulars of what led to the motion in opposition to the fintech, Das had made it clear that Paytm’s lack of regulation compliance doesn’t pose a systemic menace.
“There is no worry about the system at the moment. Here we are talking about a specific institution, a specific payment bank,” Das had stated after the MPC bulletins final week.
Das stated it begins with “nudges” from the regulator for corrective motion and typically the RBI could give greater than adequate time to an entity to comply, and it’s lack of compliance that in the end leads to the enterprise restrictions order.
The proportionality facet is considered earlier than imposing any restriction, Das stated, including, “All our actions are in the best interest of systemic stability and protection of depositors or customers’ interest.
“These aspects cannot be compromised. Individual entities should be mindful of these aspects for their long-term success.”
Paytm App Not Impacted
RBI stated that the regulatory motion is in opposition to Paytm Payment Bank Ltd and the Paytm App won’t be impacted by it.
“Just one clarification, this particular action is against Paytm Payments Bank and is not to be confused with Paytm App…App is not impacted by this action,” RBI Deputy Governor Swaminathan J stated within the media interplay after the bi-month-to-month MPC assembly.
Asked if banks can companion with Paytm pockets, he stated it’s a enterprise resolution and so they have to perform required due diligence as per their board-accredited coverage.
“I am sure they will carry out due diligence if they have got to do a partnership,” he stated.
When requested in regards to the resolution to impose the somewhat sturdy motion of enterprise restrictions, with out going for different alternate options like appointing a director on the board because it has accomplished in some circumstances within the latest previous, Swaminathan stated a “one size fits all kind of solution may not work in such situations.”
Paytm App Operational
Commenting on RBI’s clarification, a Paytm spokesperson stated, “We assure our users and merchant partners that the Paytm app remains fully operational, and our services are unaffected.”
Paytm continues to lead in cellular funds innovation and the corporate is raring to improve service choices by way of partnerships with varied banks, the spokesperson stated.
“We assure our merchant partners that Paytm QR, Soundbox and card machines will continue to work as always. Our dedication to providing seamless payment solutions and promoting financial inclusion across India remains as strong as ever,” a spokesperson added.
Not Received Approval For Downstream Investment In Paytm Payment Services
One97 Communications on Monday stated it has not obtained authorities approval for downstream funding in cost aggregator subsidiary Paytm Payment Services Ltd.
In November 2020, PPSL utilized for a licence with the RBI to function as a cost aggregator below the rules on Regulation of Payment Aggregators and Payment Gateways.
However, in November 2022, RBI rejected PPSL’s utility and requested the corporate to resubmit it, to adjust to Press Note 3 below FDI guidelines.
“As part of the Application, PPSL had also applied to the Government of India for approval of downstream investment made by the Company in PPSL, which is currently awaited. We will update the stock exchanges as and when approval is received. Meanwhile, PPSL continues to serve its existing online merchant partners,” Paytm stated in a regulatory submitting.
The banking regulator requested the agency in November 2022 to re-submit functions inside 120 days after it will get authorities approval on funding made by OCL into PPSL as per FDI pointers.
The regulator requested PPSL to proceed operations with the situation that no new retailers ought to be onboard.
After the completion of 120 days, RBI once more granted PPSL an extension however with out eradicating the bar on new service provider onboarding.
Under Press Note 3, the federal government had made its prior approval necessary for overseas investments in any sector from international locations that share a land border with India to curb opportunistic takeovers of home companies following the COVID-19 pandemic.
Countries that share land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.
Paytm has obtained important investments from Chinese corporations.
“We would also like to highlight that there have been changes in the ownership structure of the Company, with the Paytm founder, Mr Vijay Shekhar Sharma, now being the sole Significant Beneficial Owner. This was informed to the stock exchanges on September 03, 2023,” the submitting stated.
Paytm in August 2023 introduced that Sharma would purchase a ten.3 stake in Antfin by way of his abroad entity Resilient Asset Management BV which is able to make him the most important stakeholder within the firm with a 19.42 per cent stake.
In return, Resilient issued a debt instrument –optionally convertible debentures, to Antfin thereby sustaining the financial curiosity of Alibaba group agency.
With this transaction, Antfin’s direct stake in Paytm was lowered to 13.5 per cent. Antfin additional bought 3.6 per cent in Paytm to convey its shareholding to lower than 10 per cent and at current holds 9.89 per cent of the fintech agency.
(With PTI inputs)
