Paytm crisis: On Monday, it was reported that Reserve Bank of India (RBI) officials met with Vijay Shekhar Sharma, CEO of the fintech business Paytm, whose payments unit was instructed to cease onboarding new clients immediately and shut down its core banking services after February 29.
Reuters reported on Monday that Vijay Shekhar Sharma and other Paytm officials met with RBI to discuss a plan to address the regulatory issues the central bank had raised. The article cited two sources.
This is in response to rumors that a few of the founders wrote to Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanta Das, pleading with them to rethink and examine the regulatory action against Paytm Payments Bank. They had requested that the RBI reconsider the "proportionality of restrictions" on Paytm in light of the possible effects on the fintech industry, the payments bank, and the overall economy. They also demanded that Paytm be given a window of time to fix the issues and prove that it complies.
Paytm Payments Bank was subject to regulatory proceedings by the RBI due to non-compliance and supervisory issues. It requested that the payments bank halt top-ups, deposits, and transactions in customer wallets, accounts, FASTags, prepaid cards, and NCMC cards. Users of Paytm were free to take money out of their accounts or use it however they saw fit.
In the meantime, Paytm also provided a number of explanations, claiming that neither the firm nor Vijay Shekhar Sharma have been the subject of an ED investigation, nor are they being looked into for FEMA violations. Additionally, it made clear that, contrary to what some new websites had claimed, there had not been any talks with Mukesh Ambani for Jio Financial Services to purchase the Paytm wallet.
For the first time in five sessions, Paytm shares increased following the clarification. Paytm's stock increased 7.19 percent to a peak of Rs 438.35 on the BSE. The stock had increased 18.81% from its day's low of Rs 395.50.
