RBI watchful of emerging risks; be cautious of tech disruptions: Guv Shaktikanta Das
Das said the matrix of financial stability is perhaps at its best, but the real challenge is to maintain it and improve upon it further.
The Reserve Bank of India (RBI) Deputy Governor Swaminathan Janakiraman on Thursday said that the action against the Paytm Payments Bank was a result of the “persistent non-compliance” of regulatory norms.
“This is a supervisory action on a regulated entity for persistent non-compliance…,” he said.
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The RBI said that sufficient time was given to Paytm for compliance and the regulatory action was taken after it failed to comply with the rules.
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“We give sufficient time to every entity to comply and sometimes more than sufficient time to the entities for compliance. If they would comply, why would a regulator like us would have to take action?” RBI Governor Shaktikanta Das said at a press conference.
Last week, the Reserve Bank has ordered Paytm Payments Bank to stop accepting new deposits in its accounts and digital wallets with effect from February 29. The central bank also barred the entity from onboarding new customers.
“When such constructive engagement does not work or when the regulated entity doesn’t take effective action, we go for imposing supervisory or business restrictions,” Das said.
The RBI clarification came two days after Paytm founder and chief executive officer Vijay Shekhar Sharma met RBI officials and Union Finance Minister Nirmala Sitharaman in order to seek some respite.
However, according to reports, Sitharaman told Sharma that this was a regulatory action and that the government cannot anything to help the company.
Meanwhile, a group of startup founders and CEO has written to Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman and RBI Governor Das, saying the action could have far-reaching consequences for the FinTech ecosystem in the country.
“RBI’s current, seemingly punitive, regulations levied against Paytm Payments Bank could have far-reaching and detrimental consequences for the entire FinTech ecosystem. The recent directives also impact millions of users of Paytm Payments Bank and such harshness needs to be re-evaluated to safeguard the best interests of customers and merchants,” the letter stated.
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