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Business News/ News / India/  FM asks RBI to conduct monthly meetings with fin-tech cos on regulatory issues
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FM asks RBI to conduct monthly meetings with fin-tech cos on regulatory issues

The move follows RBI's crackdown on Paytm Payments Bank for regulatory breaches

Finance minister Nirmala Sitharaman on Monday met top executives of around 50 fintech firms to discuss regulatory issues being faced by them. (File Photo: PTI)Premium
Finance minister Nirmala Sitharaman on Monday met top executives of around 50 fintech firms to discuss regulatory issues being faced by them. (File Photo: PTI)

New Delhi: Finance minister Nirmala Sitharaman has asked the Reserve Bank of India (RBI) to hold monthly meetings with fintech companies to tackle regulatory concerns, a person with with direct knowledge of the matter said.

During a meeting on Monday that included top executives from leading fintech firms such as Amazon Pay, Zerodha, Cred, LendingKart, Pine Labs, and more, Sitharaman and an RBI deputy governor addressed various topics, including cybersecurity, foreign direct investment (FDI) policy, and data sharing.

"No Paytm-related anxiety or concerns were shown by startup founders and other fintech entities present during the meeting," the person added, requesting anonymity.

Late on Monday, Paytm founder Vijay Shekhar Sharma stepped down as non-executive chairman of Paytm Payments Bank as the lender overhauls its board in the face of regulatory strictures.

Last month, the RBI had barred Paytm Payments Bank from accepting any customer deposits after 29 February citing repeated non-compliance with its rules. This deadline was later extended to 15 March.

The central bank's move had prompted some entrepreneurs to appeal to both the RBI governor, Shaktikanta Das, and finance minister Sitharaman to review the imposed restrictions. They argued that such regulatory actions could potentially harm the fintech industry.

Despite these challenges, the person mentioned above said that Monday's meeting highlighted positive government actions that have supported the startup ecosystem, such as simplifying the company incorporation process, recognizing peer-to-peer lenders as non-banking financial companies (NBFCs), and establishing a regulatory sandbox and fintech repository. 

"Representatives of startup and fintech entities, present at the meeting, appreciated the processes and efficacy of GIFT City," the person added.

The finance ministry didn't respond to emailed queries.

Mint has reported that Paytm Payments Bank's regulatory issues stem from various compliance failures, including inadequate customer KYC processes and issues with customer PAN links. There was also the problem of close intertwining of the bank's financial and non-financial operations with promoter group of companies, and not having disclosed payables to its parent entity One97 Communications Ltd.

India's fintech sector, comprising approximately 10,244 entities, ranks third globally.

The government's Digital Public Infrastructure (DPI) initiatives, such as Aadhaar, UPI, and API Setu, have been instrumental in supporting this vibrant ecosystem. The Indian Stack, a comprehensive digital framework, has been pivotal in simplifying access to government services and fostering inclusive growth, showcasing the government's commitment to leveraging technology for the benefit of its citizens.

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ABOUT THE AUTHOR
Rhik Kundu
Rhik writes about the Indian economy and its crucial indicators. He is constantly navigating corporates, decoding policies, and dabbling with everything in between.
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Published: 27 Feb 2024, 10:28 AM IST
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