Reserve Bank of India has finally broken its silence on the ban on
Payments Bank. Senior
officials said that barring Paytm Payments Banks from accepting deposits was part of “a supervisory action and the restrictions are proportionate to the gravity of the situation.”
Actions followed after months of ‘warning’
Talking to media, RBI deputy governor Swaminathan J said that such actions are preceded by several months of bilateral engagement and regulated entities are provided adequate time to take corrective action in order to protect consumers and ensure the financial stability of the system.
No reason for fintech industry to worry
There have been concerns in certain sections that the move against Paytm may impact the entire fintech industry. Negating such fears RBI governor
said that it was an issue with a specific institution and there was no worry about the entire system. “Let me put the record straight on the Paytm issue. There is no worry about the entire system. It is an issue with a specific institution,” Das told reporters. He emphasised that there is no worry about the financial system at the moment. However, individual entities should be mindful because of the long term impact.
“The regulations are in place. It is not a case of regulatory deficiency. It is an issue of compliance with various parameters. I don’t want to specify the details,” Das said,
Restrictions imposed in sync with
He maintained that the restrictions imposed on the Paytm Payments Bank that have been imposed are proportionate to the gravity of the situation and a responsible regulator has to take all actions in accordance with the system and in the best interest of customers.
The RBI works with entities on a bilateral basis, nudges them to comply by giving sufficient time, and imposes business restrictions or supervisory actions only when the entity does not take necessary actions, Das said. “When constructive engagement doesn’t work or when the regulated entity does not take effective action, we go for imposing business restrictions,” Das said, adding that the actions are “proportionate” to the gravity of the situation.