RBI not against Fintech Companies, Paytm order was against Regulated Entity

Recently, the banking unit of payment services company Paytm was ordered by the Reserve Bank of India (RBI) to shut down operations due to compliance violations. This increased the apprehensions of the fintech industry. RBI has given assurance regarding this industry.

RBI Governor, Shaktikanta Das said that the action taken on Paytm Payments Bank (PPBL) was against a regulated entity. He said, “This action was taken against a regulated entity. It was not against a fintech company. I do not understand why it is being considered that the RBI has taken action against a fintech company. In this case The action was against Payments Bank.” In an interview given to a business news channel, he said that the March 15 deadline is enough for PPBL customers to shift their accounts and wallets to other banks.

He told, “If you have a payment app, then link it with any other bank by March 15. If NPCI decides to allow Paytm, then we have no objection. Our action will be taken by the bank. It was against the app, not the app.” Earlier this month, the Financial Intelligence Unit (FIU) imposed a penalty of over Rs 5 crore on PPBL. The reason for this is the violations in reporting illegal amounts sent through Paytm Payments Bank accounts.

The FIU under the Finance Ministry had started investigating Paytm Payments Bank after receiving information from law enforcement agencies that some entities were involved in illegal activities including online gambling and sending the proceeds through the bank. Regarding this, the Finance Ministry had said in a statement, “The money received from illegal activities was sent by these entities through their accounts in Paytm Payments Bank.” The FIU order said that Paytm Payments Bank had not reported suspicious transactions and due diligence of these accounts had not been done. Earlier, Paytm had said that it has been given notices to provide information and clarification from the authorities including the Enforcement Directorate.