By India Blooms News Service Feb 21, 2024
New Delhi: Finance Minister Nirmala Sitharaman has decided to hold a meeting with heads of financial technology companies next week to urge them to adhere strictly to regulatory guidelines, media reports said.
The meeting comes under the backdrop of setback faced by prominent fintech player Paytm owing to restrictions imposed by the Reserve Bank of India (RBI).
Paytm Payments Bank Ltd, a venture promoted by One97 Communications Ltd, has encountered regulatory actions from the Reserve Bank for its failure to comply with various regulatory norms, including Know Your Customer (KYC) guidelines.
According to media reports, Sitharaman will meet with CEOs of fintech companies next week to listen to their concerns and issues.
However, sources indicate that she will emphasise the importance of adhering to regulatory norms, particularly given that these companies handle individuals funds.
The meeting is expected to involve senior officials from the Reserve Bank, the finance ministry, the Department for Promotion of Industry and Internal Trade, among others.
Last week, the RBI advised both customers and merchants of Paytm Payments Bank Ltd (PPBL) to transfer their accounts to other banks by March 15.
This extended deadline of 15 days was granted to the troubled entity to wind down most of its operations, including deposit and credit transactions.
The previous deadline was February 29, 2024, which the RBI extended by 15 days to accommodate the interests of PPBL customers (including merchants) who may require additional time to make alternative arrangements in the broader public interest.
The RBI has also instructed the termination of the nodal accounts of One97 Communications Ltd, the parent company of the Paytm brand.
While One97 Communications holds a 49 percent stake in PPBL, it classifies it as an associate rather than a subsidiary of the company.
In remarks to the media, Reserve Bank Governor Shaktikanta Das affirmed the Central banks support for the fintech sector, emphasizing its commitment to fostering the rapid growth of the industry.
Even Financial Services Secretary Vivek Joshi underscored that fintech companies should adhere to regulations, highlighting that with scale comes responsibility.