BharatPe co-founder Ashneer Grover stated that the Reserve Bank of India’s (RBI) decision to restrict Paytm Payments Bank was against the interests of fintech companies. On Wednesday, the RBI directed Paytm Payments Bank to cease taking new deposits into its wallets or accounts after February 29, 2024. After that, Mr. Grover declared that the action was against all Fintech companies and that it would completely destroy the industry. He also requested that the office of Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman investigate the situation.
“I don’t understand RBI. Clearly, RBI does not want fintechs in business. Of late all regulations/moves are against Fintechs. Such moves will kill the sector altogether,” Ashneer Grover wrote on X. “Startups have been the biggest creators of market cap and employment in the last decade. Today IIM and IIT are struggling to place people — we as a country cannot afford such overreach! Tom-tom-ing UPI to the world and punishing pioneers in space is pure ‘Doglapan’!” he added.
Notably, on February 29, the RBI ordered Paytm Payments Bank, a subsidiary of Paytm, one of the biggest payment companies in India, to cease taking deposits or top-ups in any customer accounts, wallets, FASTTags, or other instruments.
Yogesh Dayal, a chief general manager at the central bank, stated in a press release that “no further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime.” The statement did, however, add that the payment bank is occasionally permitted to give customers refunds, cashback, or interest.
According to the RBI, it requested that the Paytm Payments Bank cease accepting new clients in March 2022. The RBI stated, without providing specifics, that additional supervisory action was necessary due to persistent non-compliance and ongoing material supervisory concerns in the bank as uncovered by a Comprehensive System Audit report and the external auditors’ subsequent compliance validation report. The central bank also stated that the action against Paytm Payments Bank was conducted in accordance with Section 35A of the Banking Regulation Act, 1949.
