‘Non-compliance led to Paytm action; no systemic worries’
Persistent non-compliance by Paytm with the regulatory guidelines despite nudges over a period of time ultimately led to the stern action against the fintech, the Reserve Bank of India (RBI) said on Thursday and also made it clear that there are no systemic worries.
Without disclosing specific details of what led to the action against the fintech, governor Shaktikanta Das made it clear that Paytm’s lack of compliance to regulations does not pose a systemic threat.
“There is no worry about the system at the moment. Here we are talking about a specific institution, a specific payment bank,” Das told reporters at the customary post-policy media briefing.
Deputy governor Swaminathan J. said the January 31 action against Paytm Payments Bank, wherein the RBI has barred it from onbaording new customers, and asked to stop services related to deposits, prepaid instruments and e-wallet after February 29, was the culmination of a long series of bilateral engagement.
“This is a supervisory action on a regulated entity for persistent non-compliance. Such supervisory actions are invariably preceded by months and at times years of bilateral engagement, where we not only point out deficiencies but also provide more than adequate time for them to take corrective action,” the commercial banker-turnedregulator said.
Das said it starts with “nudges” from the regulator for corrective action and sometimes the RBI may give more than sufficient time to an entity to comply, and it is lack of compliance which ultimately leads to the business restrictions order.