Paytm crisis: Being a fintech does not absolve anyone from regulatory oversight, says Rajeev Chandrasekhar

Union minister of state for electronics and information technology Rajeev Chandrasekhar

Being a fintech or a technology company does not exempt any entity from regulatory oversight, Minister for State for Electronics and Information Technology (MeitY) Rajeev Chandrasekhar said on February 3.

This comes a few days after Reserve Bank of India launched a major clampdown on Paytm Payments Bank observing a complete disregard by the company for regulatory standards and compliance requirements.

While speaking to reporters on the sidelines of the launch of the Digital India Future Labs in New Delhi, Chandrasekhar said, "A sectoral regulator has an absolute authority to regulate every entity within the sector. The RBI has done so and this is within their purview to do so."

"Being a FinTech or being a tech company doesn't absolve anybody from regulatory oversight," Chandrasekhar added.

On January 31, RBI imposed major business restrictions on Paytm Payments Bank, including accepting fresh deposits and doing credit transactions after February 29.

The regulator found that there are major irregularities in KYC, which exposed the customers, depositors, and wallet holders to serious risk. These include the absence of KYC for a very large number of customers (running into lakhs) and so on.

Recently, Finance Minister Nirmala Sitharaman, while refraining from commenting on the ongoing crisis at Paytm, expressed optimism about the fintech sector in an interview with Network18. She said that the government continues to be enthusiastic about fintech and would like to engage with more stakeholders in the space.

On February 2, PayTM founder Vijay Shekhar Sharma said that the PayTM app will continue to work beyond February 29.

Your favourite app is working, will keep working beyond 29 February as usual,” Sharma posted on X in an attempt to calm the nerves of Paytm app users. “I, with every Paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance.”