Paytm crisis: According to financial services secretary Vivek Joshi on Tuesday, the Reserve Bank of India (RBI) may provide some explanation in the Paytm case given its substantial user base and nationwide reach. The Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank (Paytm PB) last week, stating that from February 29, no deposits, credit transactions, or top-ups will be permitted in any client accounts, prepaid devices, wallets, FASTags, etc.

By March 15, 2024, Paytm PB has been required by the banking authority to settle all pipeline transactions and nodal accounts. After that date, no more transactions are to be allowed. Speaking about the current situation, Joshi stated that the current action was taken by the central bank to protect consumers.

Joshi told the Economic Times, "To the best of my knowledge, the company (Paytm) did not comply with the regulator's requirements." He also stated, "I cannot comment on a particular entity. The regulator is examining it. In an effort to safeguard consumers, RBI has taken measures."

It was stated earlier in the day that the RBI would think about either removing Paytm PB's board or terminating its licence once all pipeline transactions and nodal accounts have been settled by March 15. In accordance with Section 35A of the Banking Regulation Act of 1949, RBI has already given Paytm PB instructions.

The payments bank was ordered to stop accepting deposits and credit transactions after February 29, 2024 by the regulator after it was discovered that it had broken many rules, including know your customer (KYC) regulations. Finance Minister Nirmala Sitharaman and Paytm CEO Vijay Shekhar Sharma met on February 6. Other Paytm executives had a meeting with senior Reserve Bank of India members before this one.

“It makes sense that the board will be replaced or the license revoked in light of the Banking Regulation Act's applications in this instance. It's only a matter of time,” according to a source that the story cited.

The RBI imposed a limitation in March 2022 that stopped Paytm PB from taking on new customer registrations. Concurrently, the corporation received instructions to engage an outside auditor to assess its IT infrastructure. Notably, the central bank said that there were regular occurrences of problems with regulatory compliance that were severe enough to call for more stringent oversight measures against Paytm PB.