RBI to Issue Clarification on Paytm issue considering Large User Base: Financial Services Secretary

Amid the unfolding Paytm crisis, the Reserve Bank of India ( RBI ) is set to issue clarification, taking into account Paytm’s extensive user base, as indicated by Financial Services Secretary Vivek Joshi. Last week, RBI imposed stringent restrictions on Paytm Payments Bank ( Paytm PB ), disallowing deposit, credit transactions, or top-ups beyond February 29. The directive mandates Paytm PB to settle all pending pipeline transactions and nodal accounts by March 15, 2024, with a complete halt on subsequent transactions.

Joshi stated that the regulatory action was prompted by Paytm’s non-compliance with RBI requirements. Reports earlier in the day suggested the possibility of RBI considering cancelation of Paytm PB’s license or superseding its board post the settlement of outstanding transactions by March 15.

The current situation stems from Paytm PB’s violation of various norms, including lapses in know your customer ( KYC ) guidelines and failure to maintain an arm’s length with its promoter group companies. Compliance documentation discrepancies have led RBI to implement strict supervisory measures. As regulatory scrutiny unfolds, industry insiders anticipate further developments, with Paytm CEO Vijay Shekhar Sharma’s recent meeting with Finance Minister Nirmala Sitharaman adding significance to the unfolding events. The market has shown a keen interest, with a 10% jump in Paytm’s shares amid the crisis.

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