In a recent statement, Reserve Bank of India (RBI) Governor Shaktikanta Das made it clear that there is “hardly any room” to reconsider the regulatory action taken against Paytm Payments Bank. Das emphasized that the central bank’s decision, which mandates the cessation of a significant portion of Paytm Payments Bank’s operations by February 29, was made after a thorough assessment in the interest of consumers.
Last month, RBI directed Paytm affiliate Paytm Payments Bank to discontinue services related to deposits, credit offerings, and its digital wallets, citing ongoing non-compliance issues. In response to potential confusion, RBI is expected to release Frequently Asked Questions (FAQs) addressing various aspects of the decision against the fintech startup.
Governor Das underlined RBI’s commitment to supporting the fintech industry while prioritizing customer interests and maintaining financial stability. The regulatory crackdown is anticipated to have financial implications for Paytm, which has been experiencing a decline in users. Despite discussions at the CEO level to mitigate the damage, Paytm may find relief from the ₹2,000 crore raised during its IPO in 2021.
According to reports, Paytm raised ₹8,300 crore in November 2021 and allocated ₹2,000 crore for inorganic initiatives, including acquisitions and strategic partnerships. This unutilized fund is currently in Paytm’s bank account and could prove crucial in times of crisis. Paytm is exploring various options, including the possibility of operating as a third-party payment app (TPAP) to continue providing UPI services to its customers. The situation remains dynamic as the fintech giant navigates through regulatory challenges and explores strategic alternatives.
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