In a press conference held on Thursday following the Monthly Policy Committee (MPC) meeting, Governor Shaktikanta Das stated that the Reserve Bank of India (RBI) allows regulated entities sufficient time to adhere to regulations.
According to Deputy Governor Swaminathan J., "persistent non-compliance" was the reason behind the move against Paytm Payments Bank. He stated that the fintech company and the regulator had been in a bilateral dialogue for several months, during which the RBI had identified shortcomings and allowed the company enough opportunity to address them. Das added that compliance, not rules, was the problem with Paytm Payments Bank. Paytm Payments Bank was prohibited by the RBI earlier this month from taking new deposits starting on February 29.
"We guarantee that the Paytm app is still fully functional and that our services are unaffected, as we inform both our merchant partners and users," a Paytm representative stated.
According to Governor Das, the RBI's guiding concept is to encourage bilateral engagement with Regulated Entities (REs) in order to persuade them to take corrective action.
"When such engagement does not work or a corrective action is not taken, we go for supervisory or business restrictions," he stated.
Das stated on Thursday that the limitations "are always proportionate to the gravity of the situation" and that the safety of depositors and the stability of the economy are the primary priorities. Also, Das added at the conference that the RBI has been inundated with inquiries over the past three days from a variety of sources, including the media and the general public.
Regarding the state of the financial system as a whole, Das stated that there are now no concerns. "The RBI is and will continue to encourage and support innovation and technology in the financial sector," Das stated.
"To be clear, the action is against Paytm Payments Bank, not against the Paytm app. Swaminathan continued. Our move has no bearing on the app," we said, noting that banks have made the commercial decision to cooperate with Paytm Payments Bank. READ: KYC for Paytm Money to be examined by Central Depository Services India
"We have noted all the queries and clarifications, and based on that, we will issue a FAQ next week to address them," he stated.
Regarding the state of the financial system as a whole, Das stated that there are now no concerns. "The RBI is and will continue to encourage and support innovation and technology in the financial sector," Das stated.
Following the press conference, a Paytm representative giving users the hope stated, "We guarantee that the Paytm app is still fully functional and that our services are unaffected, as we inform both our merchant partners and users. Paytm continues to lead in mobile payments innovation and we are accelerating our partnerships with banks to offer uninterrupted services."
