Paytm founder Vijay Shekhar Sharma holds meeting with Finance Minister amidst RBI crackdown

Vijay Shekhar Sharma, the founder of India's leading digital payment platform Paytm, met with the Finance Minister Nirmala Sitharaman for approximately 10 minutes on Tuesday, February 6. The meeting comes on the heels of a severe regulatory blow dealt to Paytm Payments Bank (PPBL) by the Reserve Bank of India (RBI) on January 31.

The RBI's unprecedented move involved imposing strict restrictions on PPBL, prohibiting the bank from engaging in any banking activities after February 29. This includes accepting deposits, conducting credit transactions, facilitating wallet top-ups, and processing bill payments.

The RBI's action was a result of persistent non-compliance by Paytm Payments Bank with regulatory guidelines, compelling the central bank to take drastic measures to address the situation. The official statement from the RBI cited "persistent non-compliance and continued material supervisory concerns" as the primary reasons behind the stringent restrictions imposed on PPBL.

The central bank's decision makes it explicitly clear that Paytm Payments Bank will be unable to perform any banking operations beyond February 29, 2024, except for facilitating the withdrawal or utilisation of wallet balances by customers.

The most alarming revelation in the RBI's findings was the significant lapses in Paytm Payments Bank's Know Your Customer (KYC) processes. According to insiders, the RBI discovered that Paytm neglected proper checks while onboarding a large number of customers, running into lakhs. This oversight led to multiple instances of misuse, including money laundering activities.