FM Sitharaman on fintechs: Problems of a few should not be viewed as sectoral issue

Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman said that the problems of few individual startups, particularly in the fintech space, should not be viewed as the entire sectors' problem.

Speaking to The Indian Express in an interview on February 28, Sitharaman said that the government is "very much with the startups and every assistance will be provided to them."

"I am very empathetic about the sector, because one or two or four startups' problems cannot be seen as entire startup world's problems. Many of them (startups) are doing alright. They may want to have greater levels of comfort from the regulators, which is fine and we will provide that. I don't want the sector to have any kind of apprehensions that this is going to be my fate as we grow. The compliances will have to be simplified and made user-friendly," she said.

The finance minister further said that she had a "fantastic conversation" with startups, particularly fintech companies, in a meeting with them on February 26 where each of these firms voiced their concerns, but "the concerns were not emanating from Paytm's issues, it was more on the support they may need from the regulator and clarifications they may regularly require."

This meeting chaired by Sitharaman with around 40 fintech entrepreneurs, non-fintech founders was conducted a month after the Reserve Bank of India imposed severe restrictions on Paytm Payments Bank Limited (PPBL) due to compliance issues and regulatory overhang.

A group of founders had written a letter to Prime Minister Narendra Modi, Sitharaman, and the RBI urging them to reconsider the recent sanctions against PPBL and engage in constructive dialogue with the Fintech ecosystem.

Yet during this meeting not a single founder brought up the recent regulatory action on Paytm, according to a Moneycontrol report on February 27.

Trouble began for Paytm when the RBI, on January 31, imposed major business restrictions on PPBL including on accepting fresh deposits and doing credit transactions after February 29. This timeline was later extended to March 15. This clampdown followed a probe that raised concerns about money laundering and violation of Know Your Customer (KYC) norms by the entity.