A group of prominent startup founders has collectively reached out to Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman, and RBI Governor Shaktikanta Das, seeking a reconsideration of the regulatory directive impacting Paytm Payments Bank. The directive mandates Paytm Payments Bank to cease its core banking services after February 29.
The letter, signed by influential startup figures including Murugavel Janakiraman of Bharat Matrimony, Deepak Shenoy of CapitalMind, Ritesh Malik of Innov8, Vishal Gondal of GOQii, Yashish Dahiya of PB Fintech, and Rajesh Magow of MakeMyTrip, urges the authorities to engage in constructive dialogue with the fintech sector. It emphasizes that the RBI's regulations on Paytm Payments Bank could have widespread repercussions for the fintech ecosystem and calls for a reevaluation of these directives to safeguard the interests of Paytm's users and merchants.
The founders also highlight the potential impact of strict regulations on the country's image as a business-friendly nation. They argue that excessively stringent regulations could create an impression of inconsistency and unpredictability, potentially discouraging investors and innovators from entering the Indian market.
The founders' appeal includes a call for a review of the RBI's regulatory directions, a specified timeframe for Paytm Payments Bank to address discrepancies, and an open dialogue and collaboration between relevant stakeholders.
However, the appeal received a mixed response from the broader Indian fintech and startup ecosystem, with some founders choosing to abstain, viewing it as a Paytm-specific issue that might lead to conflicts with the regulator.
The Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank on January 31, 2023, prohibiting it from accepting deposits, credit transactions, top-ups in customer accounts, and other banking services, including UPI facilities and fund transfers, effective February 29, 2024. These regulatory actions have had a notable impact on Paytm's share price and business operations, leading to potential changes in the company's ownership.