Since 31st January 2024, Paytm, a major Indian digital payments and financial services company has been facing challenges due to its regulatory incompetency as per guidelines of the Reserve Bank of India(RBI). However, it seems like the worrisome faces of the Paytm users will finally be put to ease after the RBI’s governor’s recent statement.
According to RBI Governor Shktikanta Das, restrictions put upon Paytm’s transactional capabilities will not affect 80-85% of the users. This is because the regulatory actions primarily target Paytm Payments Bank Limited ( PPBL), which is entirely a separate entity from the main Paytm wallet service.
While the majority of users won’t be affected, the remaining 15-0% of the users who have their Paytm wallets linked to their PPBL accounts will need to take immediate action. RBI has advised these users to link their Paytm wallets with other banks by 15th, march 2024. This deadline is firm and no further extensions will be granted.
Governor Das further emphasised the RBI’s support for innovation in the financial sector, including fintech(financial technology). He mentioned that the ‘Sandbox’ framework established by RBI is an example, that platform enables companies to test their new financial products and services in a controlled environment.
Using a simple analogy, Das stated that one may own and drive a Ferrari but still one has to obey the traffic rules to avoid any accidents. Das explained that Rbi supports the growth of Fintech companies, but they need to comply with regulations.
Governor also explained that RBI has no objection to Paytm’s app licence, and if National Payments Corporation of India (NPCI) wants to continue Paytm’s operations it will be completely NPCI’s decision as the action taken was against the Paytm Payments bank only. The fate of the app’s collaboration with NPCI will soon be delivered as per the Governor’s statement.
“So far, as RBI is concerned, we have informed them that we have no objection if NPCI considers the Paytm payment app to continue because our action was against the Paytm Payment Bank. The app is with the NPCI…NPCI will take a call…I think they should be taking a call shortly,” he said
On growth in the economy, Shaktikanta Das said, “Our sense and understanding of the high-frequency indicators and the momentum of economic activity tells us that 5.9% growth in the fourth quarter could be exceeded. And when that happens the annual growth will be more than 7.6%. There is quite a good chance of the GDP number for the current year being very close to 8%.”
RBI Governor’s statement should have provided clarity for Paytm users, especially those who were concerned about the recent developments and the impact on their wallet usage.
From January 31st when RBI barred PPBL from accepting new payments, Paytm shares have seen a plunge of more than 45% with value dropping from 761.20 on 31st Jan 2024 to 400.10 today.
