Big setback to Paytm as RBI refuses concessions to Vijay Shekhar Sharma-led fintech firm: Report

Paytm has more than three crore merchants on its platform and out of these around 60 lakh use the Payments Bank as their settlement account

Published on: Feb 7, 2024, 09:27:11 IST

By HT News Desk

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In a massive setback to Paytm, the Reserve Bank of India has refused to offer any concessions during its meeting with the fintech firm founder Vijay Shekhar Sharma.

The central bank refused to help Paytm Payments Bank in any manner, including the migration of accounts to other banks or extending the deadline after February 29, Moneycontrol reported.

According to the website, Vijay Shekhar Sharma was told to speak with banks and the National Payments Corporation of India (NPCI), that runs the Unified Payments Interface (UPI). The central bank will not nudge the lenders to take this up, the report added.

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Paytm founder and CEO Vijay Shekhar Sharma, (Reuters file)

Banks not keen to on board Paytm Payments Bank customers

Moneycontrol had reported that most banks that are actively working with fintechs are not keen on on boarding Paytm Payments Bank customers without ‘blessings’ from the central bank.

Paytm has more than three crore merchants on its platform and out of these around 60 lakh use the Payments Bank as their settlement account. After snub from RBI, the company will have to migrate all these accounts to third party banks before the deadline for the payments to work seamlessly.

On Tuesday, Sharma had also met finance minister Nirmala Sitharaman amid the crisis that hit his company after RBI directing Payments Bank to stop accepting all deposits after February 29.

The meeting comes at a time when the Enforcement Directorate and Financial Intelligence Unit, both agencies tasked with checking violations under the Prevention of Money Laundering Act (PMLA), are probing matters related to the payment gateway under provisions of the anti-money laundering law.

“The Enforcement Directorate (ED) has asked the RBI to share its latest report so that it can analyse if it needs to initiate a probe against PPB,” a senior official told PTI.

However, Paytm in a statement has maintained that neither the company nor founder Vijay Shekhar Sharma are under ED probe for money laundering allegations.

(With agency inputs)

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