New Delhi/Mumbai: Paytm founder Vijay Shekhar Sharma on Tuesday met Finance Minister Nirmala Sitharaman, days after the Reserve Bank of India (RBI) banned Paytm Payments Bank from accepting fresh deposits from March due to serious regulatory violations, two people with direct knowledge of the matter told Mint.
Sitharaman met Sharma as a courtesy for the industry, said the first person mentioned above, requesting anonymity. “The FM has made it clear that it is a regulatory matter that the government cannot help the company with,” the person said.
When contacted, a spokesperson for the finance ministry declined to comment.
Earlier on Monday, Sharma, the founder and chief executive of One97 Communications, the payments bank’s parent, met RBI officials, according to a person aware of the development.
Sharma, the person said, wanted to understand the way forward after the RBI’s decision to bar the bad bank from accepting deposits from March 1. According to the person quoted above, an emotional Sharma left without any change of attitude from the bank regulator.
Some entrepreneurs have written to RBI Governor Shaktikanta Das and Finance Minister Nirmala Sitharaman, asking them to reconsider the restrictions, the Economic Times reported on Tuesday. After RBI’s action, several startup founders rallied behind Paytm, saying such regulatory measures could spell the death knell for fintechs. “RBI’s action is not against the fintech community. It is against a specific company that did not follow the norms and failed to compensate despite repeated caution,” said the person quoted above.
An email sent to Paytm Payments Bank remained unanswered till press time.
Mint reported on Saturday that the January 31 crackdown by the RBI was a result of four major issues at Paytm Payments Bank. First, the bank falsified compliance on matters pointed out by the regulator, meaning it claimed to have rectified the defects without actually doing so.
Second, Paytm Payments Bank did not do KYC for a significant section of its customers, and there were cases of a single PAN (permanent account number) – an identity document issued by the income tax department – being linked to hundreds of customers. Third, the non-financial and financial businesses of the payment bank were closely intertwined with that of the promoter of companies. Fourth, the lender reportedly failed to disclose payments to its parent unit One97 Communications Ltd.
Shares of One97 Communications fell 42% over three days after RBI banned it from most banking activities. But they recovered 3% to ₹451.6 apiece on the BSE on Tuesday after clarifications late on Monday that neither the parent nor the bank were under investigation for violating foreign exchange rules. On Tuesday, it also denied news reports that it is looking to sell its wallet to HDFC Bank and Jio Financial Services.
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This story was published by a wire agency feed without modifications to the text. Only the title was changed.
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Published: 06 Feb 2024, 22:14 IST