When the Reserve Bank of India (RBI) announced partial suspension of Paytm Payments Bank operations, it evoked criticism that the regulator was high-handed in dealing with a new-age fintech firm. Despite clear indications of non-compliance, the payments bank founded by a first-generation entrepreneur still enjoys sympathy.
However, the truth is that the regulator had given the firm ample opportunities to mend its ways. The Paytm Payments Bank saga is a sordid tale of continued disregard for compliances and regulatory norms. Due to the very nature of its business, non-compliance of regulatory standards is a cardinal sin for a banking company.
While the banking regulator has not spelt out the exact reasons for putting restrictions on the payments bank’s operations, it has indicated “persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action”.
It is being speculated that the China exposure of the bank’s parent company—One97 Communication—might have led to such stringent action. But the bank has been under regulatory scrutiny for quite some time. Time and again, RBI has taken some action or other against Paytm for its failure to keep up with regulatory rigours expected from a bank.
