Ashneer Grover, Founder of BharatPe, Criticizes RBI’s ‘Punitive Action’ Against Paytm Payments Bank (PPBL), Labels it as ‘Overreach’ and Questions Treatment of Fintechs by the Regulator.
Ashneer Grover, the Founder of BharatPe, Voices Deep Disappointment Over the Absence of Essential Legislation to Support Indian Startups. In His Critique, Grover Highlights the Existence of a $20 Billion ‘Glass Ceiling’, Suggesting that Once this Threshold is Reached, the Only Direction Seems to be Downward. He Emphasizes the Structural Unpreparedness of India for Nurturing Big Startups, Contrasting the Organic Emergence of Startups Over the Last 10 to 12 Years with the Lack of Proactive Legislative Support. Grover Also Criticizes the Government’s Eagerness to Associate with Startup Founders for Photo Ops, While Pointing Out the Glaring Gap in Legislative Initiatives to Facilitate Startup Growth and Sustainability.
Ashneer Grover Raises Concerns Over Lack of Recognition for Startups’ Systemic Importance Despite Their Significant Contribution to India’s Economy. With 111 Unicorns Driving Growth Rates of 6-7.5%, Grover Highlights Their Role in Attracting Maximum Foreign Direct Investment (FDI) and Generating Employment Opportunities. However, He Criticizes the Absence of Legislative Support for These Startups, Noting That Public Issues Arise as They Scale Up.
Paytm ‘father of all fintechs’, says Grover
Ashneer Grover Recognizes Paytm’s Pioneering Role in India’s Fintech Sector, Describing it as the Foundation for Various Ventures, Including BharatPe. While Emphasizing his Role as BharatPe’s Founder, Grover Credits Paytm for the Existence of BharatPe, Stating, ‘Paytm is the Father of All Fintechs in India; If it Didn’t Exist, BharatPe Wouldn’t Have Existed.
He Highlights Paytm’s Contribution in Introducing and Popularizing QR Code Scanning for Money Transactions in India, Which Laid the Groundwork for Other Fintech Players like Google Pay, PhonePe, BharatPe, and Pine Labs. Grover Expresses Disappointment for the Startup Community Over the Regulatory Actions Taken by the Central Bank.
Grover Criticizes RBI’s Stance
In a critique of the RBI’s approach, Grover contended that the punitive measure of license cancellation was excessively harsh. He attributed this decision to a lack of trust in younger individuals, particularly those around the age of 40, who are often perceived as mavericks in the industry.
According to Grover, regulatory skepticism stems from the traditional mindset of decision-makers within the RBI, typically individuals around 60 years old, who may harbor doubts about the ability of younger individuals, particularly those around 40 years old and labeled as mavericks, to effectively manage complex systems.
“In the RBI, decision-makers are usually around 60 years old, bringing with them extensive experience in managing banking systems. However, there seems to be a hesitancy to trust a 40-year-old, especially if they’re perceived as a maverick, with the responsibility of overseeing critical systems,” Grover remarked.
He further elaborated, “This lack of confidence extends to those in positions of authority involved in regulatory processes in India. Specifically, there’s a skepticism towards individuals in their 40s with backgrounds in computer science or programming when it comes to handling operational systems. This mindset appears to reflect a broader perspective entrenched within the institution.”
Message is ‘fintechs are not important’, says Grover
Grover highlighted Paytm’s significant milestone as the first startup in India to secure a payments bank license almost five years ago, noting that the logical progression for the company was to obtain a small finance bank license as part of its expansion plans. However, he expressed disappointment over the RBI’s decision to revoke the PPBL license, which consequently dashed any hopes of obtaining the small finance bank license.
Questioning the rationale behind this decision, Grover suggested that there exists a perspective within the RBI that innovators and pioneers often operate on the fringes of traditional banking norms, leading to disagreements on whether these boundaries are being exceeded.
“In the RBI’s view, Paytm is not considered systematically important. ‘If it dies, it dies, what do we care?'” Grover remarked, criticizing the regulatory body’s actions as punitive punishment compared to the measures taken against traditional banks. He further added, “I think it is an overreach.”