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TLDR:
The Reserve Bank of India (RBI) has refused to offer any concessions to fintech firm Paytm during a recent meeting with founder Vijay Shekhar Sharma. The central bank declined to help Paytm Payments Bank in any way and instead suggested that Sharma speak with banks and the National Payments Corporation of India. The RBI’s decision comes after it directed Paytm Payments Bank to stop accepting all deposits after 29 February, leading to concerns about the future of the company.
Key points:
- The RBI has refused to offer any concessions to Paytm during a recent meeting with founder Vijay Shekhar Sharma.
- Paytm Payments Bank will have to migrate all its accounts to third-party banks before the deadline for payments.
- Most banks are reportedly not keen on onboarding Paytm Payments Bank customers without the approval of the RBI.
- Paytm has more than three crore merchants on its platform, with around 60 lakh using the Payments Bank as their settlement account.
In a meeting with the Reserve Bank of India (RBI), fintech firm Paytm suffered a significant setback as the central bank refused to offer any concessions. The RBI declined to help Paytm Payments Bank in any manner, including extending the deadline after 29 February or supporting the migration of accounts to other banks. Instead, the RBI suggested that Paytm founder Vijay Shekhar Sharma speak with banks and the National Payments Corporation of India, which oversees the Unified Payments Interface.
This decision comes after the RBI directed Paytm Payments Bank to stop accepting all deposits after 29 February. The move has raised concerns about the future of Paytm, which has more than three crore merchants on its platform, with around 60 lakh using the Payments Bank as their settlement account. With the RBI’s refusal to offer any concessions, Paytm will now have to migrate all these accounts to third-party banks before the deadline in order to ensure that payments can continue without disruption.
Moneycontrol has reported that most banks actively working with fintech companies are not interested in onboarding Paytm Payments Bank customers without the “blessings” of the RBI. This further complicates Paytm’s situation as it searches for alternative banking partners. The company has already faced scrutiny from agencies tasked with preventing money laundering, including the Enforcement Directorate and the Financial Intelligence Unit.
Paytm founder Vijay Shekhar Sharma recently met with Finance Minister Nirmala Sitharaman to discuss the crisis facing his company. However, Paytm has denied any wrongdoing and stated that neither the company nor Sharma are under investigation for money laundering.
The refusal of the RBI to offer concessions to Paytm is a major setback for the fintech firm. The company now faces the challenge of finding new banking partners to migrate its accounts to before the deadline, while also dealing with ongoing scrutiny from regulatory agencies. Paytm’s future hangs in the balance as it navigates these obstacles and attempts to maintain its position as a leading player in India’s digital payments landscape.
