According to a source familiar with the matter, Finance Minister Nirmala Sitharaman has directed the Reserve Bank of India (RBI) to convene monthly meetings with fintech firms to address regulatory challenges effectively.
In a meeting held on Monday, Finance Minister Nirmala Sitharaman, along with a Deputy Governor of the Reserve Bank of India (RBI), engaged in discussions with top executives representing prominent fintech companies like Amazon Pay, Zerodha, Cred, LendingKart, Pine Labs, and others. The agenda of the meeting covered a range of topics, including cybersecurity, foreign direct investment (FDI) policy, and data sharing.
According to an anonymous source, startup founders and other fintech entities in attendance during the meeting did not express any anxiety or concerns related to Paytm.
Furthermore, on Monday evening, Paytm founder Vijay Shekhar Sharma announced his resignation as non-executive chairman of Paytm Payments Bank as part of the bank’s board restructuring in response to regulatory pressures.
In the wake of the Reserve Bank of India’s (RBI) decision to prohibit Paytm Payments Bank from accepting customer deposits after February 29, citing repeated non-compliance with regulatory guidelines, the deadline was subsequently extended to March 15. This development prompted some entrepreneurs to petition both RBI Governor Shaktikanta Das and Finance Minister Nirmala Sitharaman, urging a review of the imposed restrictions. Concerns were raised regarding the potential adverse effects of such regulatory actions on the fintech industry.
Despite these challenges, the individual mentioned earlier noted that Monday’s meeting underscored positive government initiatives aimed at supporting the startup ecosystem. These initiatives include streamlining the company incorporation process, recognizing peer-to-peer lenders as non-banking financial companies (NBFCs), and implementing a regulatory sandbox and fintech repository.
Furthermore, the individual highlighted that representatives of startup and fintech entities present at the meeting expressed appreciation for the processes and effectiveness of GIFT City.
The finance ministry did not respond to emailed queries regarding the regulatory issues surrounding Paytm Payments Bank.
According to a report by Mint, Paytm Payments Bank’s regulatory challenges stem from various compliance lapses, including insufficient customer Know Your Customer (KYC) processes, issues with customer Permanent Account Number (PAN) links, and the close intertwining of the bank’s financial and non-financial operations with the promoter group of companies. Additionally, the bank reportedly failed to disclose its payables to its parent entity, One97 Communications Ltd.
India’s fintech sector, consisting of approximately 10,244 entities, ranks third globally in terms of its size and significance.
The government’s Digital Public Infrastructure (DPI) initiatives, such as Aadhaar, Unified Payments Interface (UPI), and API Setu, have played a crucial role in supporting this dynamic ecosystem. The Indian Stack, a comprehensive digital framework, has greatly simplified access to government services and promoted inclusive growth, highlighting the government’s commitment to harnessing technology for the welfare of its citizens.