In a nutshell, the Reserve Bank of India (RBI) stated that its recent regulatory action against Paytm Payments Bank was prompted by the company’s ongoing failure to adhere to regulatory requirements and norms.
Finfluencer Akshat Shrivastava reignited the debate between fintech companies and traditional banks as Paytm endeavors to navigate through the crisis instigated by the RBI’s directive, which prohibits the fintech’s lending arm from accepting deposits in its accounts or the widely-used digital wallet after February 29th.
Shrivastava’s statement implies that while Zomato doesn’t pose a substantial challenge to traditional banks, PayTM, at least previously, had the potential to do so. This insight helps to understand why Zomato isn’t actively pursuing a traditional FinTech role.
The Reserve Bank of India (RBI) has recently awarded a payment aggregator (PA) license to Zomato Payments Private Limited, a subsidiary of the food delivery platform Zomato. This license permits the company to facilitate e-commerce transactions on its platform.
Payment aggregators play a crucial role in the e-commerce ecosystem by enabling websites, mobile apps, and merchants to accept various payment instruments from customers without having to develop their own payment interface.
Shrivastava’s statement suggests that Zomato is primarily competing with digital payment platforms like Google Pay (GPay), rather than traditional banks. He highlights that Zomato’s focus is on facilitating e-commerce transactions, such as payments for food deliveries, rather than offering financial products like mutual funds or insurance, which are typical services provided by banks.
The response to Shrivastava’s post suggests that some users disagreed with the characterization of the situation regarding PayTM’s regulatory issues. They argue that it’s not solely the pressure from banks that led the RBI to take action against PayTM, but rather concerns raised by audit reports regarding certain transactions. This implies that there may be multiple factors contributing to the RBI’s decision to intervene in PayTM’s operations.
The RBI’s crackdown on Paytm Payments Bank was attributed to persistent non-compliance with regulatory norms. RBI Deputy Governor Swaminathan J stated that regulatory actions were taken after providing sufficient time for compliance. RBI Governor Shaktikanta Das, without directly naming Paytm, emphasized that the regulatory action was prompted by a lack of compliance.
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