FM Sitharaman to meet over 20 fintechs today, discuss KYC norms and compliance

The FM is likely to emphasise on the importance to adhere to KYC norms and compliances

Finance Minister Nirmala Sitharaman is set to meet as many as 20 fintech firms, barring Paytm, on February 26, along with senior officials from the Reserve Bank of India (RBI) to emphasise the importance of KYC compliance, a senior government official said.

“The Finance Minister is meeting the fintech firms sometime next week, possibly February 26 or 27. Senior officials from the RBI will also attend. At least 20 fintech firms, related to lending, payment processing and mutual funds are likely to be called for the meeting,” the official told Moneycontrol.

"However, Paytm is unlikely to be called for the meeting," he added.

The meeting comes close on heels after the RBI asked the Paytm Payments Bank account holders, both customers and merchants, to move their assets and look for alternative banks till March 15 on account of major irregularities in KYC compliance.

“The meeting is not on Paytm Payments Bank per se. Without taking any sides, the FM is likely to emphasise on the importance to adhere to KYC norms and compliances. Sitharaman will also hear the issues of the fintechs while urging them to comply,” the official said.

Since RBI officials will be present at the meeting, they will also talk to the fintechs about innovation and the issues in their regulation. The Finance Minister will act as a mediator between RBI and the fintech companies, the official added.

The meeting is being seen as a step by the government to ensure that more fintechs do not come under the scrutiny of the central bank for KYC non-compliances.

On January 31, the RBI imposed business restrictions on Paytm Payments Bank. The central bank said a comprehensive system audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and continued material supervisory concerns in the bank, warranting further supervisory action.

The RBI has prohibited Paytm Payments Bank Ltd (PPBL) from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags after March 15. RBI Governor Shaktikanta Das has stated that there is limited scope for reconsidering the measures taken against Paytm Payments Bank. The central bank takes action against regulated entities only after conducting a thorough evaluation, he said.