'We are concerned about...': Startup founders rally behind Paytm; urge RBI, FM to review regulatory directive
In their letter to the RBI and the Finance Minister, a group of startup founders rallying behind Paytm underscored the broader implications of the regulatory action, emphasizing its potential to cast a negative shadow on India's business environment and global reputation.
In an unprecedented move, a coalition of prominent startup founders has rallied behind Paytm founder Vijay Shekhar Sharma, urging the Reserve Bank of India (RBI) to reconsider its recent regulatory directive against Paytm Payments Bank's operations. The group, comprising luminaries such as Ritesh Malik of Innov8, Yashish Dahiya of Policybazaar, Rajesh Magow of MakeMyTrip, and Murugavel Janakiraman of Bharat Matrimony, has penned a letter to RBI Governor Shaktikanta Das and Finance Minister Nirmala Sitharaman, expressing their concerns and calling for a review of the decision.
The regulatory directive issued by the RBI on January 31 mandated Paytm Payments Bank to halt the acceptance of new deposits into its accounts and digital wallets by March, citing supervisory concerns and non-compliance with regulatory standards. The move sent shockwaves through the Indian fintech ecosystem, prompting a swift and unified response from the startup community.
In their letter to the RBI and the Finance Minister, the group underscored the broader implications of the regulatory action, emphasizing its potential to cast a negative shadow on India's business environment and global reputation.
"We are particularly concerned about the potential ramifications of the current regulatory directive on Paytm Bank, extending far beyond the immediate impact on the company itself. This action, perceived as overly punitive, could send a negative signal to the global business community… a vibrant fintech ecosystem thrives on regulatory clarity, predictability and a supportive environment," the founders said in their letter.
"While safeguarding financial stability remains paramount, achieving this objective should not come at the cost of stifling innovation and entrepreneurial spirit,” the founders added in their representation, urging also the Prime Minister to consider their plea.
The coalition of startup founders has additionally called for a provision “granting Paytm Payments Bank a clear and practical window to address identified deficiencies and demonstrate compliance" and sought for "open dialogue and collaboration".
The response from the startup community underscores the interconnectedness of India's digital economy and the imperative of regulatory frameworks that are conducive to innovation, competition, and consumer protection. As India continues its journey towards becoming a global fintech hub, the outcome of this dialogue between regulators and industry stakeholders will be closely watched by both domestic and international observers.