The Reserve Bank of India (RBI) took tough action against Paytm Payments Bank (PPBL) on account of its persistent non-compliance with regulations.
The restrictions it imposes against regulated entities (REs) are always “proportionate to the gravity of the situation’’, the apex bank said.
The RBI also disclosed it will come out with a FAQ (frequently asked questions) next week on its clampdown against PPBL, adding its restrictions do not apply to the Paytm app.
On January 31, RBI directed that no fresh deposits, credit transactions or top-ups will be allowed in any customer accounts, prepaid instruments, wallets and FASTags of the Paytm bank after February 29.
Fielding a host of questions on the stringent measures against PPBL, RBI governor Shaktikanta Das said there is no systemic worry and that the development concerns a specific institution.
RBI deputy-governor Swaminathan J. pointed out that the January 31 action came after a long series of bilateral engagements.
“This is a supervisory action on a regulated entity for persistent non-compliance. Such supervisory actions are invariably preceded by months and at times years of bilateral engagement, where we not only point out deficiencies but also provide more than adequate time for them to take corrective action,’’ he said.
Das added the RBI tries to “nudge” the regulated entities (REs) in the desired direction.
“Our emphasis is always on bilateral engagement with the REs with a focus on nudging them for corrective action. And sufficient time is given for undertaking such corrective action. When such constructive engagement which we undertake does not work or when the RE does not take effective action we go for imposing supervisory or business restrictions.”
“Such restrictions which we impose are always proportionate to the gravity of the situation. Being a responsible regulator and responsible supervisor all our actions are in the best interests of systemic stability and protection of depositors or customers interests. These aspects cannot be compromised,’’ he said.
Meanwhile, shares of Paytm on Thursday ended on the lower circuit.
