Supervisory Action Taken After Persistent Non-compliance Of Paytm Payments Bank: Dy. Guv Swaminathan

Reserve Bank of India(RBI), Deputy Governor, Swaminathan J, spoke about the current Paytm fiasco and stated that the action was taken against the fintech player due to persistent non-compliance. Swaminathan J refused to discuss the details of the action taken against Paytm Payments Bank but clarified that such action is a supervisory measure that is taken after months or sometimes years of bilateral engagement where deficiencies are pointed out and corrective measures are suggested.

"We don't want to discuss details of action on Paytm Payments Bank. This is supervisory action for persistent non-compliance. Such action is invariably preceded by months and sometimes years of bilateral engagement where we point out the deficiencies but also give time to take corrective action. As a regulator, it is incumbent upon us to protect the consumer," RBI Deputy Governor Swaminathan J said.

Swaminathan J explained that the RBI always provides companies with enough time to resolve issues before taking such action. 

He further added: "Our focus is always on engaging with regulated entities bilaterally and we nudge them to take corrective action. We give them sufficient time to take corrective action...Without making any specific references to Paytm, I want to make some general comments about all our regulated entities. One, over the last few years, we have significantly deepened our supervisory approach and methods."

Swaminathan also mentioned that as a responsible regulator, the RBI is committed to protecting consumers. If corrective measures are not taken by companies that are not compliant with regulations, the RBI will take regulatory/supervisory action, he added. 

Regarding the recent issue with Paytm, RBI Governor Shaktikanta Das clarified that it is not a concern for the entire financial system and is limited to a specific institution. 

"Over the last few days, we have received a lot of queries. We have noted them down. Based on that, we will be issuing an FAQ sometime next week," the RBI Governor said. He reassured the public that they don't need to worry about the system's stability. "All our actions are in the best interest of systemic stability and protection of depositors' interests. These aspects cannot be compromised," he added.