The Reserve Bank of India’s (RBI) recent decision to impose restrictions on certain aspects of Paytm’s operations has garnered praise from those advocating for stringent regulatory oversight. The move underscores the importance of adherence to rules and regulations in the dynamic fintech sector, said the Confederation of All India Traders (CAIT). CAIT said that RBI action on Paytm has clearly established that no one can ride on rules & regulation under the regime of Prime Minister Shri Narendra Modi who has time & again cautioned about strong action on law offenders.
On March 11, the RBI barred Paytm Payments Bank from onboarding new customers. The central bank said a Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action.
No further deposits or credit transactions or top-ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29 other than any interest, cashbacks, or refunds which may be credited anytime, the RBI said.
The RBI, however, clarified that the withdrawal or utilisation of balances by the lender’s customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. are to be permitted without any restrictions.
CAIT Secretary General Praveen Khandelwal said that RBI’s decisive action demonstrates its commitment to upholding regulatory standards and ensuring accountability within the fintech ecosystem. The regulatory body’s vigilance is essential for maintaining the integrity and stability of the financial sector especially for those who are least bothered about adherence to the law of the land, CAIT secretary general states.
Khandelwal goes on to add that the regulatory intervention is seen as a proactive step to protect consumers and uphold the trust they place in digital financial platforms. It emphasizes the importance of user security and adherence to established norms. “On the other hand, in the wake of lax regulatory practices in the fintech sector, the RBI order reinforces market integrity. The decision sends a strong message that regulatory compliance is non-negotiable for companies operating in this space propounding the directions & vision of Prime Minister Shri Narendra Modi. he added that the restrictions on Paytm highlight the need for accountability among major players in the fintech industry.”
Companies, including Paytm, are urged to comply with regulations to avoid disruptions that can impact users and the market. Companies flouting rules and regulations must take a cautionary tale for other players who may be tempted to bypass established norms in any sector of the Indian economy, says CAIT. Khandelwal emphasizes the importance of transparent operations and communication from fintech companies.
The lack of clarity in Paytm’s case has raised concerns, emphasizing the need for greater transparency in regulatory frameworks, according to the association. Khandelwal argues that such interventions empower users by ensuring that the services they rely on adhere to established standards. “Consumer protection is paramount, and regulatory oversight plays a crucial role in achieving this. As the fintech landscape continues to evolve, the RBI’s stance is expected to encourage a culture of compliance and responsibility among digital financial service providers. It also serves as a reminder that regulatory diligence is vital for fostering a secure and trustworthy environment for users and stakeholders alike.”
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