Switch To Other Payment Apps: CAIT Advises Trades Amid Paytm Row
Amid the ongoing controversy, the Confederation of All India Traders (CAIT) has issued a cautionary advisory to Indian traders to switch from Paytm to other payment apps in light of Reserve Bank of India (RBI) restrictions.
Recently, RBI in the exercise of its powers under section 35A of the Banking Regulation Act, 1949, had directed Paytm Payments Bank (PPBL) to stop onboarding new customers with immediate effect. PPBL was the associate bank of Paytm.
The trade body in a statement said, "Take proactive measures to protect funds and ensure uninterrupted financial transactions. A large number of small traders, vendors, Hawkers and women are making payments through Paytm and as such RBI restrictions on Paytm could lead to financial disruption to these people."
In a joint statement, BC Bhartia, National President and Praveen Khandelwal, Secretary General said that the recent restrictions imposed by RBI on Paytm have raised concerns about the security and continuity of financial services provided by the platform.
The trade leaders alleged that one of the major reasons for the ban on Paytm Payment Bank was the creation of millions of accounts without proper identification. The process of Know Your Customer (KYC) was not completed for these accounts.
"Moreover, transactions involving millions of rupees were conducted without proper identification, raising concerns about money laundering," they added in the joint statement.
While citing sources, Reuters reported that India's central bank has found hundreds of thousands of accounts at Paytm Payments Bank created without proper identification and has passed the information on to the country's financial crime-fighting agency.
The central bank is concerned that some of the accounts could have been used for money laundering, Reuters reported while citing sources. As well as informing the Enforcement Directorate, the RBI has sent its findings to the Ministry of Home Affairs and the prime minister's office, they added.
The trade body CAIT believes that if there is any evidence of fund irregularities, the Enforcement Directorate (ED) should investigate Paytm Payment Bank.
Bhartia and Khandelwal underscored the importance of risk mitigation for traders, urging them to explore alternative payment applications compliant with regulatory guidelines.
To ensure the seamless functioning of transactions and safeguard financial assets, both trade leaders suggested that several banks do have their payment applications as well and those could be a good alternative to secure money for the people.
They emphasised the urgency of this advisory, urging traders to act promptly and make informed decisions to mitigate any potential adverse effects on their financial operations.
Both trade leaders said, "Our advisory is a precautionary measure to protect the financial interests of traders in light of recent developments. We encourage users to stay informed and take proactive steps to ensure the security of their funds."
