PriyaPatelTLDR:
- Rajeev Chandrasekhar, Minister for State for Electronics and Information Technology, has stated that fintech companies are not exempt from regulatory oversight.
- The statement comes after the Reserve Bank of India cracked down on Paytm Payments Bank for disregarding regulatory standards and compliance requirements.
A sectoral regulator has the authority to regulate all entities within the sector, including fintech companies, according to Rajeev Chandrasekhar, the Minister for State for Electronics and Information Technology. This statement comes in response to the recent crackdown by the Reserve Bank of India on Paytm Payments Bank for not meeting regulatory standards and compliance requirements. The RBI has imposed restrictions on the bank, including the inability to accept fresh deposits and conduct credit transactions after February 29, 2024. The RBI’s investigation revealed major irregularities in the KYC of Paytm Payments Bank customers, posing a risk of data mishandling and money laundering.
Despite the restrictions placed on Paytm Payments Bank, company founder Vijay Shekhar Sharma has confirmed that the Paytm app will continue to function normally. Paytm Payments Bank is a restricted bank that can accept deposits but cannot lend. Rajeev Chandrasekhar’s statement serves as a reminder that even though fintech companies may operate in the technology space, they are still subject to regulatory oversight.
Overall, this article highlights the ongoing Paytm crisis and the need for fintech companies to adhere to regulatory standards and compliance requirements. It emphasizes the authority of sectoral regulators, like the RBI, to regulate all entities within their sector, regardless of whether they are fintech or tech companies. It also mentions the restrictions imposed on Paytm Payments Bank by the RBI and the potential consequences the bank may face if it fails to address the regulatory irregularities. Finally, it mentions the assurance from Paytm founder Vijay Shekhar Sharma that the Paytm app will continue to function normally despite the restrictions on the Payments Bank.
