Paytm crisis: Vijay Shekhar Sharma says "Indian startup dream must overcome every situation collectively"

Paytm founder & CEO Vijay Shekhar Sharma

Facing regulatory crisis after the Reserve Bank of India (RBI) put curbs on Paytm Payments Bank, the namesake fintech major's founder and chief executive officer Vijay Shekhar Sharma said to a group of founders that the 'Indian startup dream must overcome every situation collectively.'

"Thank you everyone for your relentless support. Obviously a conversation at wider level should help. We should not let anything deter us from what we all have built over so many years," he said.

"The Indian Startup Dream must overcome every situation collectively. Here, for good," he added.

The RBI on January 31 imposed major business restrictions on Paytm Payments Bank.

The central bank said a validation report of the external auditors revealed “persistent non-compliances and continued material supervisory concerns in the (Paytm Payments) Bank” thus forcing it to take such a drastic action.

In its order against Paytm Payments Bank, the RBI stated that no further deposits, credit transactions, or top-ups will be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashbacks, or refunds that may be credited anytime.

Also read: Moving Paytm Payments Bank accounts to other banks likely to be a difficult task

Following the strict action, Paytm informed exchanges that it is "taking immediate steps to comply with RBI directions, including working with the regulator to address their concerns as quickly as possible".

Shares of Paytm crashed 20 percent in early trade on February 1.

The RBI diktat sent shockwaves across the fintech industry, with many founders coming out in Paytm's support while terming the move as one of the harshest decisions undertaken by the regulator against a fintech company in recent times.

"Can't believe RBI would just go destroy a bank like this. When Yes Bank had much bigger issues they took over and got other banks to take over. To protect the system they ensured a smooth transition in 15 days. But now they prefer to let all the banks customers, vendors and partners suffer and create a confidence issue unnecessarily, and force the business down," said Deepak Shenoy, CEO, Capitalmind.

Co-founder at Indiagold and former Senior VP-Products at Paytm, Deepak Abbot, also came out in the company's support.

"Having seen @Paytm from inside and outside, they will come out lot stronger and better. All leading Banks line up to partner with One97 (Paytm). IMO, this will give One97 a much bigger opportunity to become a preferred platform for multiple banks' offerings in a single app," he added.