RBI Governor Says ‘Hardly Any Room’ To Review Action On Paytm Payments Bank

Amid the ongoing regulatory crisis at Paytm, following the Reserve Bank of India’s (RBI’s) fresh restrictions on Paytm Payments Bank, the central bank’s governor Shaktikanta Das on Monday (February 12) said there is “hardly any room” to review the action on the payments bank.

Addressing the media, Das reiterated that the RBI takes actions after giving enough time to the regulated entities to correct the deficiencies.

“The decisions taken by the Reserve Bank are taken after due thought process…be it a bank, payment bank or cooperative bank. If we are taking action against somebody, not specifically talking about Paytm, but in general, we interact for months and years…There is hardly any room for review,” he said. 

Das said the central bank provided Paytm Payments Bank one-month’s time so that customers are not inconvenienced. He reiterated that the RBI would come out with FAQs (frequently asked questions) on the matter later this week.

It is pertinent to note that the central bank on January 31 barred Paytm Payments Bank from taking any deposits or credit transactions, or top-ups in any of its customer accounts on January 31 for “persistent non-compliances and continued supervisory concerns”. 

Besides, the payments bank has also been barred from providing other banking services, such as UPI facility and fund transfers, after February 29, 2024. 

Last week, while addressing the media after its monetary policy committee’s (MPC’s) meeting, the top officials of the RBI said that the central bank’s action was on Paytm Payments Bank and not against Paytm. They also said that the RBI would come out with FAQs on the matter.

As per reports, the RBI is further mulling cancellation of the payments bank’s operating licence after February 29. 

Amid these troubles, Paytm last week announced the formation of a group advisory committee to address compliance and regulatory issues.

The panel will be headed by former SEBI chairman M Damodaran. Ex-president of the Institute of Chartered Accountants of India (ICAI) MM Chitale and erstwhile chairman and managing director of Andhra Bank R Ramachandran will be the other members of the committee.

The payments bank is reportedly also on the lookout for an external firm to audit its compliance. 

Shares of Paytm have plunged sharply since the RBI placed restrictions on its payments bank. On Monday, shares of Paytm ended the trading session 0.65% higher at INR 422.60 on the BSE.