FM Nirmala Sitharaman To Meet Fintech Heads Amid Paytm Payments Bank Crisis

Amid the Reserve Bank of India’s (RBI’s) crackdown on Paytm Payments Bank and the shockwaves it has sent across the fintech ecosystem, finance minister Nirmala Sitharaman is reportedly set to meet heads of fintech startups on February 26.

As per an ET report, the meeting has been arranged to reassure the fintechs that the sector remains a key priority for the government.

The meeting will also be attended by an RBI deputy governor and top officials from the Ministry of Finance, the Ministry of Information Technology, and the Department for Promotion of Industry and Internal Trade (DPIIT).

“The idea is to understand what their fears are and reassure them,” an official was quoted as saying by the publication. 

The report also said that the government wants to send out a strong signal to the fintech companies and the startup ecosystem that the regulatory action against one company stemmed from the latter’s actions but the sector remains a priority. 

It is pertinent to note that the RBI on January 31 barred Paytm Payments Bank from undertaking any deposits or credit transactions, or top-ups in any of its customer accounts. The central bank also stopped the company from providing any banking services, including UPI facility and fund transfers, after February 29.

Following this, a group of entrepreneurs wrote to Prime Minister Narendra Modi, finance minister Sitharaman, and RBI governor Shaktikanta Das, urging them to “review” and “reconsider” the regulatory directive.

The letter was signed by names such as Deepak Shenoy of CapitalMind, Ritesh Malik of Innov8, Murugavel Janakiraman of Bharat Matrimony, Yashish Dahiya of PB Fintech, Rajesh Magow of MakeMyTrip, and Murugavel Janakiraman of Bharat Matrimony. They had requested a constructive dialogue with the fintech ecosystem.

Regarding the clampdown on Paytm Payments Bank’s business, RBI governor Das said that there was “hardly any room” to review its action on the company. However, the RBI later extended the deadline on the business restrictions to March 15 from February 29 earlier, which provided some respite to the company.

Over the last few years, the RBI has taken multiple steps to better regulate the fintech ecosystem. However, some of these steps have hit the fintech startups hard. Most recently, the RBI directed an unnamed card network to halt all card-based business payments made via payment intermediaries to entities that do not accept card payments on February 15.

This decision by the central bank is expected to impact all fintech intermediaries or business payment service providers offering credit cards to corporates for business transactions.