Commenting on the Paytm crisis that erupted last month, Reserve Bank of India (RBI) Deputy Governor Swaminathan Janakiraman on Thursday said that this is a regulatory / supervisory action.
“We are giving the company enough time to take corrective measures,” he said, adding that the action was taken after persistent non-compliance.
Central bank governor Shaktikanta Das said he did not want to comment on any particular entity. However, he noted that the RBI, at times, gives more than enough time to comply.
“There is no concern about the (financial) system at present,” Das said at the press conference held after announcing the RBI’s Monetary Policy.
He reiterated that the regulations are robust and in place, there was no regulatory deficiency, but the issue is about compliance.
“Such restrictions that we impose are always proportionate to the seriousness of the situation. All our actions, being a responsible regulator, supervisor, are in the best interest of system stability and protection of depositors or interest of clients. These aspects do not can be endangered,” said Das.
Also Read: RBI gives commitment list for financial institutions amid Paytm crisis
Meanwhile, the Paytm crisis took center stage at the aforementioned media interaction and the Governor also made some general observations about regulatory entities, including RBI’s deepened supervisory approach and methods over the past few years.
“Our emphasis is always on bilateral engagement with regulated entities with a focus on pushing the REs to take corrective actions and sufficient time is given to take such corrective actions. When constructive engagement does not work or REs do not act, we go for enforcement or trade. restrictions,” Das noted.
The head of the apex bank noted that such restrictions are proportionate to the seriousness of the situation.
“All of our actions being a responsible supervisor are in the best interest if system stability and in the best interest of the customer’s interest. We will be issuing an FAQ next week to address all questions,” Das said.
The Paytm Saga began when the RBI on January 31 directed Paytm Payments Bank to stop all forms of banking services — including accepting deposits and processing payments — effective February 29.
The disciplinary action is seen as unprecedented for the financial services industry, and will affect the app’s users as well as the wider business community that uses the Paytm network for payment processing, payroll and other quasi-banking functions.
Meanwhile, Paytm CEO and Founder Vijay Shekhar Sharma met RBI officials and Finance Minister Nirmala Sitharaman. In the meeting with the FM, Sharma explained the company’s position regarding the various issues flagged by RBI. Sitharaman is understood to have impressed upon Sharma the need to discuss the matter with the RBI and sort out the non-compliances that have been flagged, ET reported.
One 97 Communications stock was trading at Rs 459.05, down 7.5 percent as of 12.40 pm on Thursday. It should be noted that since February 5, the stock has lost 42.4 percent of its value or Rs 20,500 crore in market capitalization.