On Tuesday, Vijay Shekhar Sharma, the founder and CEO of Paytm, had a meeting with Union Finance Minister Nirmala Sitharaman to talk about the difficulties his fintech company is dealing with due to recent restrictions imposed by the Reserve Bank of India.
Hours after Vijay Shekhar Sharma and some Paytm officials met with the RBI to address regulatory concerns, a high-level meeting occurred. According to a Reuters report, the central bank listened to the fintech giant without making any promises.
According to report that talks are underway to tackle regulatory concerns and compliance issues with both the RBI and the ministry.
The RBI instructed Paytm last week to halt new deposits in its accounts and widely used digital wallets starting February 29. Paytm has requested an extension from the RBI and is seeking clarification regarding the transfer of its license for the wallets business and FASTag.
Paytm denied reports suggesting that the company or its founder, Sharma, are under investigation by the Enforcement Directorate. The company’s statement categorically denies any investigation for anti-money laundering activities involving OCL, its associates, or its Founder and CEO.
The company stated that they want to clarify and refute any involvement in anti-money laundering activities. They emphasized their commitment to complying with Indian laws and treating regulatory orders seriously.
Action taken by RBI against Paytm
The RBI announced that Paytm Payments Bank won’t accept new deposits or conduct credit transactions after February 29. However, interest, cashbacks, or refunds may still be credited. Additionally, the Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are set to be terminated by February 29.
Moreover, all pending transactions and nodal account settlements (related to transactions initiated on or before February 29) must be finalized by March 15, 2024. After this date, no additional transactions will be allowed.
The RBI cited persistent non-compliance and ongoing supervisory concerns in Paytm Payments Bank based on reports from external auditors. Despite this, customers can freely withdraw or use their account balances, including those in savings accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc., up to the available balance.
In March 2022, the RBI instructed Paytm Payments Bank to immediately halt new customer registrations. Additionally, the bank must engage an IT audit firm to conduct a thorough system audit. Future customer registrations will require specific approval from the RBI following a review of the audit report due to identified supervisory concerns.
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