Paytm crisis: MeitY Minister affirms regulatory control over Fintech

Minister for State for Electronics and Information Technology (MeitY), Rajeev Chandrasekhar, addressed the ongoing Paytm crisis, emphasizing that fintech firms are not exempt from regulatory oversight. Speaking at the launch of Digital India Future Labs in New Delhi, Chandrasekhar stated that being a FinTech or tech company doesn't absolve anyone from regulatory scrutiny, and sectoral regulators, such as the RBI, have the authority to regulate entities within their sectors. This statement follows the Reserve Bank of India's recent crackdown on Paytm Payments Bank, citing a "complete disregard" of regulatory standards and compliance requirements.

In response to the Paytm crisis, MeitY Minister Rajeev Chandrasekhar asserted that being a fintech company doesn't exempt entities from regulatory oversight, underscoring the authority of sectoral regulators such as the Reserve Bank of India (RBI). Chandrasekhar made these remarks at the launch of Digital India Future Labs in New Delhi, stating that the RBI's actions against Paytm Payments Bank were well within their purview.

The RBI had imposed significant restrictions on Paytm Payments Bank, preventing it from accepting fresh deposits and conducting credit transactions after February 29, 2024. The RBI's investigation revealed major irregularities in the KYC processes of many Paytm Payments Bank customers, posing a risk of data mishandling and money laundering. While speculations abound regarding a potential permanent suspension after the February 29 deadline, Paytm founder Vijay Shekhar Sharma reassured users that the Paytm app will continue to function normally.