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Business News/ Companies / News/  No review of action against Paytm Payments Bank: RBI gov Shaktikanta Das

No review of action against Paytm Payments Bank: RBI gov Shaktikanta Das

Shaktikanta Das said the central bank's decision came after a comprehensive assessment of the Paytm Payments Bank's operations and was taken in the interest of the consumers.

Reserve Bank of India Governor Shaktikanta Das addresses a press conference. (PTI)Premium
Reserve Bank of India Governor Shaktikanta Das addresses a press conference. (PTI)

NEW DELHI : Reserve Bank of India (RBI) governor Shaktikanta Das on Monday ruled out any review of the central bank’s action against Paytm Payments Bank Ltd (PPBL), saying the decision was taken after a lot of consideration and a comprehensive analysis of the lender’s functioning.

The RBI on 31 January directed PPBL to stop accepting deposits or top-ups in customer accounts, wallets, FASTTags and other instruments after 29 February citing large scale non-compliance of regulations and supervisory concerns.

“At the moment let me say very clearly, there is no review of this decision. If you are expecting a review of the decision, let me very clearly say there is no review of the decision and nothing is on the table," Das said at a press conference after a meeting of the RBI’s central board of directors. The meeting was also addressed by finance minister Nirmala Sitharaman.

The RBI chief said any decision against an entity regulated by the central bank is taken after lot of thought and months—often years—of painstaking analysis and assessment of the functioning of the entity.

“Decisions are taken in most serious manner in public interest. We take action only when we see no action on part of the regulated entities," Das said.

While emphasizing that the RBI is supportive of the fintech sector, Das said it is also committed to protecting the interest of customers as well as ensuring financial stability.

The central bank is expected to issue a set of FAQs (Frequently Asked Questions) on the Paytm matter this week. Das said the FAQs are being issued keeping the customer and depositor interest on top.

Earlier too, on 11 March, 2022, the RBI had barred PPBL from onboarding new customers with immediate effect. While taking the decision on the bank, RBI has, however, allowed credit of interest, cashbacks or refunds even beyond 29 February.

On the question of economic growth, the RBI governor said that the central bank was confident that the 7% gross domestic product growth projected for FY25 would be achieved on the back of strong momentum in economic activity.

“Whether it is in the aggregate demand or investment cycle, overall momentum of economic activity continues to be strong. Our analysis shows that GDP growth in FY25 will touch 7%," Das said.

He also said that private investment may pick up in next fiscal as the government moves ahead on the path of fiscal consolidation, which has also translated into lower borrowings by the Centre, making more resources available in the banking system for being used by the private sector.

“Fiscal consolidation and lower central borrowings are growth inducing measures that should also induce investment by the private sector as more credit will be available to them," he said.

The FY25 interim budget has brought down the fiscal deficit levels for FY24 from projected 5.9% to 5.8% and has budgeted a deficit of 5.1% for FY25 with the goal of taking it to targeted 4.5 % in FY26 as part of the fiscal consolidation glide path. This should also moderate the high debt-to-GDP ratio that currently stands at around 81%.

“India is at the forefront of path of fiscal consolidation among all emerging economies," Das said.

Das said the path toward growth- inducing fiscal consolidation may also lower bond yields and help to stabilize and moderate inflation.

Inflation has seen moderation in the past few months, with retail inflation easing to 5.10% on an annual basis in January as against a four-month high of 5.69% in December.

Das also said finance minister Nirmala Sitharaman on Monday launched linkage of India’s UPI system with fast payment systems of Mauritius and Sri Lanka that will allow users in both neighbouring countries to transact using a QR code for merchant purchases and other activities. The RuPay card will also be issued by banks in Mauritius that could be used for digital payments and ATM withdrawals in both the countries.

“The arrangement with Sri Lanka is the third in the SAARC region after UPI services were also started in Nepal and Bhutan earlier. The arrangement with Mauritius is the first in the African region and it will act as a gateway for taking UPI to other African countries," Das said.

He also highlighted that during her address to RBI central board of directors, the finance minister listed out priorities of the government as provided in the budget.

Das said that the high capex provided in the budget was a GDP multiplier that would help the economy grow further.

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Published: 12 Feb 2024, 04:20 PM IST
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