Reserve Bank of India Governor Shaktikanta Das on Monday said there will be no review of the restrictions imposed on Paytm Payments Bank (PPB) for regulatory violations, as the move was in the best interest of customers.
“We take decisions after a lot of consideration and analysis, which is often for months and years. If you are expecting a review of the decision (against PPB), let me very clearly say (that) there is no review of the decision,” Das said. “There is nothing on the table on the review of the decision (on PPB). When we make a decision, we examine all pros and cons,” he emphasised.
The Governor said that the frequently asked questions (FAQs) on PPB will be issued later during the week to deal with customer issues related to FASTags, wallet, and depositors.
On January 31, the RBI imposed restrictions on PPB citing “persistent non-compliance and continued material supervisory concerns”. The RBI had ordered PPB to wind down most of its business, including deposits, credit products and digital wallets, by February 29.
“We have given one month’s time so that there are no difficulties to customers….so that customers and adjust and transition,” Das said.
In its order against Paytm, RBI barred PPB from further deposits or credit transactions or top-ups in any customer accounts, pre-paid instruments, wallets, FASTags, NCMC cards, etc after February 29, other than any interest, cashbacks, or refunds which may be credited anytime.
However, it allowed withdrawal or utilisation of balances by its customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc without any restrictions, upto their available balance.
Das said RBI is supportive of the fintech sector, but for it interest of customers and financial stability was of utmost importance.
Besides the KYC norms violations, PPB could also have flouted foreign exchange norms at the entity level, sources had said earlier. FE had reported earlier that the Enforcement Directorate (ED) was gathering information about the “end uses” of foreign direct investment (FDI) in One97 Communications, which owns PPB.
The RBI has been pursuing the matter for the last several months with PPB, which along with the Paytm app has around 40 million transacting customers.
On March 11, 2022, the RBI had also directed PPB to stop onboarding of new customers with immediate effect.
Currently, 34 foreign (FDI) investors hold a little over 45% of One97 Communications, and over 450 FPIs together have an 18.64% stake in the firm. The rest of the shares are with PPB part-time chairman Vijay Shekhar Sharma (9.1%), retail investors (12.85%), mutual funds (4.99%), body corporates (6.33%) and others.
Also, FDI in fintech firms are governed by separate guidelines issued by the RBI, governing electronic payments, know-your-customer requirements and data localisation.