RBI Reveals Ongoing Supervisory Concerns and Non-compliances in Paytm Payments Bank.
Paytm CEO Vijay Shekhar Sharma reassured users on Friday following the regulatory order that barred its banking arm from accepting fresh deposits. The move is seen as a significant setback for the fintech firm.
The Reserve Bank of India (RBI) issued restrictions on Wednesday for Paytm Payments Bank, instructing a cessation of all banking activities by the end of February. Existing customers are allowed to withdraw funds and use prepaid cards or wallets without any limitations.
The central bank revealed, through a statement, that an audit report identified “persistent non-compliances and ongoing significant supervisory concerns within the bank, necessitating additional supervisory measures.”
Despite this, Paytm CEO Vijay Shekhar Sharma assured users on Friday that the Paytm app would continue to function as usual beyond February 29.
Analysts at Bernstein labeled the RBI directive as a negative development, adding to an existing heavy regulatory burden on the business. They emphasized that the RBI’s actions effectively signal the conclusion of operations for Paytm Payments Bank.
Following the regulatory development, Paytm announced a temporary pause in its lending platform operations for a couple of weeks. The company is actively engaging in discussions with banks for potential partnerships.
Bhavesh Gupta, COO of Paytm, mentioned that they are addressing concerns from each lender and providing clarifications on the impact on the portfolio. The company is working through questions raised by lenders and providing necessary information in response.
In a conference call with analysts, Vijay Shekhar Sharma stated, “This is an important moment for all of us; we have seen the update from RBI. The important thing is that we have been given directions, and we are taking immediate steps to comply.”
The fintech firm anticipates an impact of Rs 300-500 crore due to the regulatory directive.
Read more Business News
