After regulators placed severe curbs on the banking affiliate Paytm Payments Bank Limited (PPBL), Paytm founder and former chief Vijay Shekhar Sharma on March 5 voiced confidence that his digital payments pioneer will overcome regulatory setbacks in India this year, reported Bloomberg on Tuesday.
In his first public appearance at a financial technology conference in Tokyo since the Reserve Bank of India (RBI) ordered his banking affiliate to halt certain activities, Sharma said, as quoted by Bloomberg, “The biggest thing that I’ve learned is that many times your teammate and adviser may not be getting it correct.”
“And it is important for you, yourself to be taking care of it versus just letting a teammate or a adviser suggest that what should it be (sic).”
He resigned from the PPBL board in February after the RBI prohibited the bank from accepting new deposits in its customer accounts or wallets.
However, PPBL reconstituted its board following the regulator’s action, appointing four new directors. Sharma, who owns 51 per cent of PPBL, stepped down as a part-time non-executive chairman but continues to lead Paytm that he founded a decade earlier.
ALSO READ: FIU fines Paytm Bank ₹5.5 crore for PMLA violation
The RBI had imposed the curbs on PPBL after years of warnings as the flow of money and data traffic between the tightly regulated bank and the rest of the Paytm universe created accounting and supervisory problems.
The regulator directed PPBL to stop accepting fresh deposits from customers with effect from February 29 – a deadline which was later extended to March 15.
Meanwhile, Sharma said he values the role regulators play in creating a healthy environment for startups in India.
“Things become very big and systematically important, very fast,” Sharma said, adding, “We have been able to very happily see our regulator engage.”
Ever since the RBI imposed the prohibitions on the bank on January 31, shares of Paytm have plunged about 45 per cent.
“Asia has an opportunity to build a financial system for the next generation,” Sharma said, adding, “Make Paytm an Asia leader — in my lifetime, I would like to do that.”
He noted in Tokyo that now he has clarity on the strategy for Paytm, including forging new bank partnerships for the India market and expanding geographically into other Asian markets.
“Ambiguity brings stress,” he said. “When you are clear, when you know, then it is the perseverance on the mission that you are in.”
“This is a great day when I have new lessons to learn and new opportunities to address,” he said.
Financial Intelligence Unit (FIU) action on PPBL:
The Financial Intelligence Unit (FIU) has imposed a fine of ₹5.49 crore on PPBL for failing to put in place an internal mechanism to ‘detect and report’ suspicious transactions as stipulated under the anti-money laundering law or Prevention of Money Laundering Act (PMLA).
The FIU in its March 1 order said that the charges against the bank were ‘substantiated’ after more than four years of investigation and a show cause notice that was issued against it on February 14, 2022.
With the Union Finance Ministry issuing a press statement on the FIU action, a PPBL spokesperson had said that the penalty pertains to issues within a business segment that was discontinued two years ago.
“Following that period, we have enhanced our monitoring systems and reporting mechanisms to the Financial Intelligence Unit (FIU),” the spokesperson had said.
With agency inputs.
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Published: 05 Mar 2024, 08:20 PM IST