RBI Official States No Plans for Stricter Regulations to Control Fintech Sector Following Paytm Sanctions
Paytm has been under regulatory scrutiny for the past two years, receiving multiple warnings from the regulator during this time.
India’s banking regulator doesn’t intend to impose drastic measures on the country’s fintech sector, a senior official said, weeks after it stunned investors by abruptly suspending much of the operations of Paytm Payments Bank, founded by high-flying billionaire Vijay Shekhar Sharma.
There are “no harsher measures coming on fintech,” P. Vasudevan, an executive director in charge of enforcement at the Reserve Bank of India, said on Friday. The central bank would be happy to see self-regulation for the sector, but expected firms to follow rules on data privacy, Vasudevan said. He added the supervisor wants to have a hands-off approach on fintech regulation.
The comments from Vasudevan, a key official closely involved in the development of the payments space in India in the past decade, are comforting even as the regulator cranks up its actions against payments firms violating the customer verification and data protection norms put in place by the central bank.
SoftBank Group Corp.-backed Paytm, a major player in India’s fintech sector, has faced regulatory scrutiny for some time, receiving multiple warnings over the past two years regarding questionable transactions between its popular payments app and its lesser-known banking arm. According to a Bloomberg report earlier this month, the RBI is considering revoking the license of Paytm Payments Bank Ltd. as early as next month.
In addition to taking action against Paytm Bank, the regulator has caused concern among payment services providers this week by instructing a large card network to cease certain operations. The central bank argued that the card network was not authorized to offer a payment system without proper authorization.
Earlier this month, RBI officials, including Governor Shaktikanta Das, stated that the regulator is supportive of the fintech industry and aims for companies to thrive.
