Paytm to form advisory committee on regulatory compliance amid RBI clampdown
By Team Asianet Newsable | First Published Feb 9, 2024, 8:13 PM ISTPaytm announced on Friday its plans to establish an advisory committee dedicated to addressing compliance and regulatory issues, just a week after the RBI instructed its banking arm to phase out operations.
In response to recent regulatory challenges, Paytm, a prominent player in India's digital payments sector, has announced the formation of an advisory committee focused on compliance and regulatory matters. The move comes in the wake of the Reserve Bank of India (RBI)'s directive to its banking affiliate, Paytm Payments Bank, to wind down significant aspects of its operations. Former chairman of India's markets regulator, M. Damodaran, will lead the panel, which "will work closely with the board", Paytm said.
Last week, the RBI mandated Paytm Payments Bank to cease several key functions, including deposits, credit products, and digital wallets, by February 29, citing persistent non-compliance issues. The regulatory intervention underscores the importance of adherence to regulatory guidelines in India's rapidly evolving digital payments landscape.
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Paytm Payments Bank serves as a regulated entity, facilitating deposits for Paytm users to conduct transactions on the app. However, concerns surrounding non-compliance and regulatory violations have prompted regulatory action, highlighting the need for robust governance frameworks within the fintech sector.
In addition to the RBI's directives, Paytm has faced scrutiny over alleged foreign exchange rule violations by India's anti-fraud agency. The company has vehemently refuted these claims, asserting that they are unfounded and factually incorrect. Nevertheless, the regulatory scrutiny has underscored the challenges inherent in operating within a highly regulated environment.
Competing in a crowded marketplace against rivals such as Walmart's PhonePe and Google, Paytm remains a popular choice for a wide range of transactions, from purchasing groceries to household items. However, the recent regulatory setbacks have taken a toll on the company's financial performance and investor sentiment.
Since the RBI's action on January 31, Paytm's stock has witnessed a significant decline, losing 45% of its value and eroding approximately $2.6 billion of shareholders' wealth. The market reaction underscores the impact of regulatory developments on investor confidence and underscores the importance of proactive measures to address regulatory concerns.
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