Paytm Bank board alerted by RBI on non-compliance | India Business News

Feb 9, 2024



New Delhi: Reserve Bank of India has banned Paytm Payments Bank Discussed with entity officials at multiple levels ranging from accepting any new deposits starting next month plankBefore taking extreme measures.
Sometime in November-December 2021, a top reserve Bank of India The officer addressed the board of directors of the bank and asked them to ensure compliance with all guidelines. “The high-ranking official had shared the sentiment of the RBI and its serious concerns and had tried to influence the board to ensure effective compliance,” a source familiar with the matter told TOI. Now it has come to light that two directors of the bank have resigned.
This development comes at a time when Paytm management and some startup founders are lobbying with the government and the regulator to provide a new lease of life to the bank.
This also shows that a few months later the RBI barred Paytm Payments Bank from onboarding new customers as it did not see much progress on compliance and sent a strong signal, which the new generation entity failed to catch. In fact, the regulator took the third step in October 2023, when it imposed a monetary penalty.
On February 1, TOI was the first to report that Paytm was forced to face the RBI over inaction as the management was unresponsive to address regulatory concerns. Over the past few years, the RBI has adopted a strategy of conveying its concerns to management and then raising it with the board, which has worked in most cases, including slowing down the pace of lending.
At the post-monetary policy press conference on Thursday, central bank Governor Shaktikanta Das had listed out the overall supervisory strategy adopted by the RBI, which includes important steps in the overall systems and approach.
Further, while Deputy Governor Swaminathan Janakiraman had said the regulator follows a policy of bilateral engagement, Das said the idea is to motivate an entity to take corrective action and given adequate time.
He had said, “When such constructive engagement does not work, or when the regulated entity does not take effective action, we turn to supervisory or commercial sanctions. Such sanctions are always proportionate to the seriousness of the situation. ” Consumer and depositor interests are in the interest of systemic stability.
The RBI governor also dismissed apprehensions among some startups over the impact on fintech and innovation.



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