The RBI on Friday extended the deadline for Paytm Payments Bank Crisis ,clients to make deposits and access credit transactions until March 15. In addition, the central bank has produced a list of frequently asked questions about the Paytm crisis.
Paytm Payments Bank Crisis RBI Said:
The Reserve Bank of India (RBI) on Friday extended the deadline for Paytm Payment Bank users to conduct deposits and credit transactions till March 15, according to an official document.
This decision comes despite the bank’s protracted turmoil, which has concerned customers and regulatory agencies.
No additional deposits, credit transactions, or top-ups shall be permitted.
No further deposits, credit transactions, or top-ups shall be permitted in any customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards, and so on after March 15, 2024 (an extension of the earlier deadline of February 29, 2024), with the exception of any interest, cashbacks, sweep ins from partner banks, or refunds, which may be credited at any time,” the RBI stated.
Paytm Payments Bank Crisis
On January 31, the central bank directed that no deposits or top-ups be accepted in any client accounts, wallets, FASTags, or other instruments after February 29, 2024. The RBI stated that a Comprehensive System Audit report and subsequent compliance validation report from external auditors identified recurring non-compliances and serious supervisory issues at Paytm Payments Bank Ltd. Based on this, the central bank implemented numerous restrictions on the bank.
RBI’s standing on the Paytm Payments Bank Crisis
RBI Governor Shaktikanta Das stated on Thursday that all of its actions, including the limits put on Paytm’s associate bank, are in the best interests of the public.
“As a responsible regulator and supervisor, we take all actions that promote systemic stability and protect depositors’ or customers’ interests. These aspects cannot be compromised. Individual entities should be cognizant of such issues for long-term performance,” the RBI Governor stated during the post-monetary policy press conference, in response to a series of questions from reporters.
His statements were generic and not limited to Paytm. Das also outlined how the RBI, as a regulator, interacts with regulated entities as necessary.
“We provide every regulated firm that is supervised by the RBI sufficient time to comply with the regulatory obligations, and sometimes it appears to be more than enough time. We are a responsible regulator and supervisor. If everything had been complied with, and I am speaking generally, why should we act? After all, we have a responsibility, and this is a responsible institution,” Das explained.
Paytm Payments Bank Crisis Observations by RBI:
“We are entirely focused on encouraging the regulated company to take corrective measures…And adequate time is provided for implementing such corrective measures. When constructive engagement fails or the regulated company does not take meaningful action, we resort to impose supervisory or business restrictions.”
Das stressed that the move against Paytm should only be viewed as an action in the best interests of customers.
“Such restrictions which we impose are always proportionate to the gravity of the situation,” he went on to say.
Das stated that the RBI has received inquiries and clarifications on this matter and would produce a list of frequently asked questions (FAQs) sometime next week.
Paytm Payments Bank Crisis RBI keep encouraging :
On the whole fintech space, Das stated that the RBI will always encourage and assist the financial system, and there should be no doubts to the opposite.
In response to the Paytm issue, Deputy Governor Swaminathan stated, “As a matter of policy, we don’t comment on individual entities, but as the question is from most of you, we will respond.”
First, this is a supervisory action against a regulated entity for persistent noncompliance. Second, such supervisory actions are almost often preceded by months, if not years, of bilateral interaction in which we not only point out shortcomings but also give them more than enough opportunity to remedy them,” ANI cited him as saying.
“Third, as regulators, it is our responsibility to protect the interests of the ultimate consumer, thereby ensuring the stability of the financial system. “These actions must be viewed in that specific context,” Swaminathan remarked.
When asked what lies ahead, the deputy governor replied, “You’ll have to wait. We have received feedback and will work on it. As a responsible regulator, we will take appropriate steps.
ED Heat on Paytm:
ED Heat on Paytm
The Enforcement Directorate questioned senior Paytm officials on Thursday and requested papers from them in response to the recent RBI move prohibiting Paytm Payments Bank Ltd from receiving deposits or top-ups in any customer account, according to PTI, citing official sources. According to insiders, the central agency is undertaking preliminary document review before deciding whether to initiate a formal investigation into the RBI-flagged suspected violations at the fintech company under the Foreign Exchange Management Act.
Paytm executives recently provided some documents and were asked specific questions. According to reports, additional information is being sought.
One97 Communications, which offers financial services under the Paytm brand, and its banking affiliate Paytm Payments Bank have received notices and requests for information regarding consumers of the respective firms, according to an exchange filing by the company on Wednesday.
Paytm stated that its subsidiary Paytm Payments Bank Limited does not handle outgoing foreign remittances.
Paytm stated that the firm and its associates have continued to give the authorities with the information, documents, and explanations they require.
According to sources, the Enforcement Directorate and the Financial Intelligence Unit asked the RBI earlier this month to share its report on the recent action that barred Paytm Payments Bank Ltd from receiving deposits or top-ups in client accounts.
The Financial Intelligence Unit (FIU) has also requested a report from the RBI to determine if Paytm or PPBL followed the necessary processes as a “reporting entity” under Section 13 of the PMLA.
Under this section of the anti-money laundering law, a financial institution, bank, or intermediary must provide information to the FIU about maintaining records of all transactions and documents proving the identity of its clients and beneficial owners, as well as account files and business correspondence relating to its clients.
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