Paytm CEO Vijay Shekhar Sharma Holds Talks With FM And RBI Officials Amid Regulatory Concerns

Finance Minister Nirmala Sitharaman was met by Paytm founder and CEO Vijay Shekhar Sharma on Tuesday.

Additionally, Reserve Bank of India (RBI) officials were also met by him, days after the regulator imposed a ban on Paytm Payments Bank (PPBL).

PayTM CEO meets FM Sitharaman

While sharing the details of the meeting, the concerned person said, "It was a short meeting of about 10 minutes in the evening with the Finance Minister. His position was explained by him (Sharma). He was asked to reach out to the RBI for resolving the issue," reported Indian Express.

On January 31, Paytm Payments Bank was barred by the RBI from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, FASTags, and NCMC card after February 29, 2024, in the wake of persistent non-compliance and material supervisory concerns.

The crackdown on PPBL was initiated following a comprehensive system audit report and subsequent compliance validation report by external auditors, as stated by the RBI. It was directed by the RBI that the Nodal Accounts of One97 Communications Ltd (OCL), the owner of Paytm, and Paytm Payments Services Ltd, be terminated at the earliest, in any case not later than February 29, 2024, as reported by NDTV.

RBI officials were met by Sharma, who serves as a part-time Chairman of the bank and sought some relaxations on the regulatory action on PPBL, according to sources. A response was not received to a mail sent to One97 Communications.

Since 2018, Paytm Payments Bank has been under RBI scrutiny. The recent action by the RBI on PPBL occurred after it was discovered that the bank had violated KYC norms and linked the same PAN to multiple customers. Additionally, it was noted that the bank was permitting transactions above the permissible limit, raising concerns over money laundering.

Observations about the processes followed by the company to acquire new users, particularly on KYC norms, were made by the RBI in June 2018. Following an audit by the RBI, Paytm Payments Bank ceased enrolling new customers, revealing inadequate KYC norms compliance.

In a conference call on February 1, the RBI action on PPBL was described by Sharma as more of a significant speed bump, expressing confidence that the bank would overcome it in the next few days or quarters. Sharma also indicated that OCL would reduce its dependency on PPBL, with nodal accounts and QR codes to be transferred to other banks, according to Indian Express.

Meanwhile, shares of OCL, which declined by 43 per cent in the last three sessions, recovered by 3 per cent to Rs 451.60 on the BSE on Tuesday. Speculation regarding Jio Financial of the RIL group engaging in talks to acquire Paytm Payments Bank's wallet business was denied by OCL. Paytm clarified that such acquisition talks were speculative, baseless, and factually incorrect, stating that neither they nor Paytm Payments Bank had engaged in any negotiations.