The recent action taken by the Reserve Bank of India (RBI) against Paytm Payments Bank is in the interest of consumers and the overall Indian economy, Financial Services Secretary Vivek Joshi said.
In an interview with Moneycontrol on February 7, Joshi said that the issue was between the company and the Indian central bank and had to be sorted out at that level.
Also Read: Tough times ahead for Paytm’s bank as RBI gives no concessions
"What can I say about Paytm. It is an action taken by the regulator. They regulate the banks," Joshi said.
"The government has had nothing to do until now when it comes to the actions taken on Paytm. And we believe that the RBI must have taken the action in the overall interest of the consumer and the economy," he added.
Joshi's comments come a day after Paytm founder Vijay Shekhar Sharma met Finance Minister Nirmala Sitharaman. Joshi, who was present at the meeting, refused to divulge details of the meeting.
"I was there in the meeting yesterday with the finance minister. But I can't reveal what was discussed as it is a privileged conversation. The sum and substance is that you (Paytm) have to deal with the regulator."
When asked if there are any financial stability concerns due to the action taken by the RBI on Paytm Payments Bank, Joshi said it is a very small bank and as such, there were no systemic risks.
Paytm has been under tremendous pressure after the RBI on January 31 directed its payments bank to stop accepting fresh deposits and making credit transactions after February 29. Paytm Payments Bank has also been barred from accepting top-ups in any customer accounts, including prepaid instruments, wallets, FASTags and NCMC cards.
The RBI said it was taking action against Paytm Payments Bank after the Comprehensive System Audit and compliance validation report of the external auditors revealed "persistent non-compliance and continued material supervisory concerns in the bank, warranting further supervisory action".
Amid reports of a possible Enforcement Directorate probe, Revenue Secretary Sanjay Malhotra told Moneycontrol on February 3 that while law enforcement agencies will investigate Paytm if needed, there is no such action afoot at the moment.
Paytm has denied any probe into it, its associates, and the company's founder for money laundering activities.
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