Paytm crisis: Startup founders write to RBI Gov, FM Sitharaman to ‘reconsider’ action against Paytm Payments Bank

Paytm crisis: A group of startup founders have written to Reserve Bank of India (RBI) governor Shaktikanta Das and finance minister Nirmala Sitharaman asking them to reconsider the regulatory action against Vijay Shekhar Sharma-founded Paytm’s payments bank unit. The RBI had asked Paytm Payments Bank to stop onboarding new customers immediately and shut its key banking services after February 29.

According to a report in The Economic Times that accessed the letter signed by Policybazaar’s Yashish Dahiya, MakeMyTrip’s Rajesh Magow, Bharat Matrimony’s Murugavel Janakiraman, and Innov8’s Ritesh Malik, the founders said that the action against Paytm would have far-reaching impact on the ecosystem and not just on Paytm. 

The group of founders urged RBI to reassess the “proportionality of restrictions” on Paytm considering the potential impact on the payments bank, the fintech ecosystem and the broader economy. According to the report, the founders also requested for a “clear and practical window” for Paytm to address the deficiencies and demonstrate its compliance. 

The RBI on January 31, directed Paytm Payments Bank to stop onboarding of new customers due to “persistent non-compliances and continued material supervisory concerns in the bank”. Paytm Payments Bank has been asked to stop further deposits, transactions, top-ups in customer accounts, wallets, FASTags, prepaid instruments, NCMC cards and more.

However, customers who have balances available in their accounts can either withdraw or utilise the same with no restrictions, RBI said. 

Moreover, Paytm parent One97 Communications has clarified that there has been no probe by the Enforcement Directorate on the company or founder Vijay Shekhar Sharma. It also clarified that the company is not being probed for Foreign Exchange Management Act (FEMA) violations. 

Paytm’s price band limit has been reduced to 10 per cent from 20 per cent earlier, and the shares have fallen 43 per cent in the past three sessions.

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