The Reserve Bank of India (RBI) on Wednesday ordered Paytm Payments Bank to stop accepting fresh deposits in its accounts or popular wallets after February 29, 2024. Many on the internet called the move ''shocking'' and condemned RBI for imposing severe restrictions on Paytm Payments Bank. Reacting to the development, Capitalmind CEO Deepak Shenoy called the central bank's action "uncharacteristically over the top".
"Can't believe RBI would just go destroy a bank like this. When Yes Bank had much bigger issues they took over and got other banks to take over. To protect the system they ensured a smooth transition in 15 days,'' he wrote on X.
''But now they prefer to let all the banks' customers, vendors, and partners suffer create a confidence issue unnecessarily, and force the business down. Better ways to handle this, this is uncharacteristically over the top by RBI,'' he added.
See the tweet here:
In a reply to a tweet, he mentioned that that he is not against RBI taking action but the kind of action it has taken. "Secondly, I'm not saying that RBI does not deserve to take action. I'm questioning the kind of action it's taking-- they could still censure the current management, but take over the bank and effect a merger, reducing customer/merchant angst and not hitting system confidence," he wrote.
Mr Shenoy is not the only one to condemn the central bank over its action against Paytm Payments Bank. Earlier, businessman Ashneer Grover said that the central bank's move was against the interest of fintech firms.
Mr Grover declared the move to be against all Fintech firms and said that the decision would kill the sector altogether. He also called upon Finance Minister Nirmala Sitharaman and Prime Minister Narendra Modi's office to look into the matter.
Paytm Payments Bank, which is part of one of India's largest payment firms Paytm, was told by the regulator that it will not be able to take fresh deposits, facilitate credit transactions, or offer fund transfers, including Unified Payments Interface (UPI) facility after February 29.
The RBI's order cited "persistent non-compliances and continued material supervisory concerns in the bank" that were flagged after a comprehensive audit of its systems by external parties. Neither the company nor its founder/CEO, Vijay Shekhar Sharma, have responded so far.
