RBI Governor assures Paytm users of smooth transition amid regulatory action

Shaktikanta Das on Paytm

New Delhi: In the wake of the Reserve Bank of India’s (RBI) action against Paytm Payments Bank Ltd. (PPBL), RBI Governor Shaktikanta Das on Wednesday assured the users of Paytm Wallet that they will not face any major disruption in their services. He said that only 15 percent of the users who have their wallets linked to PPBL will have to link them to other banks by March 15, the deadline set by the RBI. He added that there is no scope for extending the deadline as the time given is adequate.

The RBI had barred PPBL from accepting deposits or ‘top-up’ any customer account from January 31, after finding that it had violated the licensing norms. PPBL is a separate entity from Paytm, the popular payment app, which is regulated by the National Payments Corporation of India (NPCI). PPBL had offered its customers the option to open a savings account with it and link their wallets to it.

Das said that the RBI’s action was not against the financial technology (fintech) sector, but against a specific entity that had failed to comply with the rules. He said that the RBI supports innovation in the fintech sector and has introduced a ‘sandbox’ system for testing new products in a limited scope. He said, “RBI fully supports fintech and will continue to do so…RBI is fully prepared for the development of fintech.”

He gave an analogy that a person can own and drive a Ferrari, but he still has to follow traffic rules to avoid accidents. He said that the RBI’s role is to ensure that the fintech sector operates within the regulatory framework and does not pose any risk to financial stability or consumer protection.

He also said that the RBI has no objection to NPCI continuing with the Paytm payment app, as the app is not under the RBI’s jurisdiction. He said that the NPCI would have to decide on the app’s license after conducting its investigation. He said, “As far as RBI is concerned, we have informed them that we have no objection if NPCI considers to continue with Paytm payment app because our action was against Paytm Payment Bank. The app is with NPCI…NPCI will consider it…I think they should decide on this soon.”

On the economic front, Das expressed optimism that the growth rate will surpass 5.9 percent in the fourth quarter of the current fiscal year, based on important economic indicators such as GST collection, electricity consumption, PMI, etc. He said, “And when that happens, the annual growth rate will definitely be more than 7.6 percent.” He said that there is a strong possibility that the GDP figure in the current year will be around eight percent.

Shaktikanta Das on Paytm

He also said that the RBI has projected a growth rate of seven percent for the next fiscal year in its recent monetary policy review. Regarding inflation, Das said that the latest data shows that inflation has been 5.1 percent, which is 1.10 percent higher than the target of four percent. He said, however, that the inflation trend is towards moderation and RBI is now focusing on the target of bringing inflation down to four percent on a sustainable basis.