Finance Minister Sitharaman Meets Fintech Companies: SBI, NPCI Officials Attend, Emphasis on Regulatory Compliance

Today, Finance Minister Nirmala Sitharaman is set to convene a meeting with approximately 20 fintech companies to discuss regulatory issues. Senior officials, including Deputy Governors of the Reserve Bank of India (RBI), are expected to participate in the discussion. According to media reports, Paytm Payments Bank will not be present at this meeting.

The meeting will involve discussions with well-known fintech companies such as Amazon Pay, Zerodha, Lendingkart, Pine Labs, and Cred. Topics of discussion will include KYC norms and potential innovations in this field. Senior officials from the country’s largest public sector bank, SBI, and the National Payments Corporation of India (NPCI) will also be present at the meeting.

Agreement Between Finance Minister and Regulators

According to media reports, sources indicate that during the meeting, the Finance Minister might urge fintech companies to fully comply with regulations. Alongside, regulators like the RBI and NPCI could also be advised that the burden of regulations shouldn’t stifle innovation in the sector.

RBI Imposes Ban on Paytm Payments Bank

On January 31, the Reserve Bank of India (RBI) issued a circular stating that after February 29, funds cannot be deposited into accounts held by Paytm Payments Bank. The bank will not be able to accept money in its wallets, prepaid services, Fastag, and other services. However, a new directive issued on February 16 extends this deadline until March 15.

RBI Takes Action Against Paytm Payments Bank for Non-Compliance

The Reserve Bank of India (RBI) has imposed significant business restrictions on Paytm Payments Bank due to non-compliance with regulations, particularly regarding prolonged non-adherence to prudential regulations. RBI’s action has affected a substantial portion of Paytm’s business operations. Paytm faced major penalties due to significant irregularities, posing risks to its customers.

Paytm had failed to conduct KYC for millions of its customers, and many accounts lacked PAN validation. Single PAN was often used for multiple customers. On numerous occasions, the bank provided inaccurate information to the RBI. Additionally, RBI found a considerable number of inactive accounts associated with Paytm Payments Bank.