Reserve Bank of India Governor Shaktikanta Das said on Thursday that all its actions, including certain restrictions it imposed on Paytm’s associate bank, are in the best interest of the public.
“All our actions being a responsible regulator and supervisor are in the best interest of systemic stability and protection of depositors or customers’ interest. These aspects cannot be compromised. Individual entities should be mindful of such aspects for their long term success,” RBI Governor said at the post monetary policy press conference, responding to series of questions from reporters.
His remarks were in general and not just specific to Paytm. Das also explained how RBI as a regulator, if need arises, engages with a regulated entity.
“We give sufficient time to every regulated entity that is supervised by the RBI to comply with the regulatory requirements, and sometimes it may even look more than sufficient time. We are a responsible regulator, we are a responsible supervisor. If everything had been complied, I am talking in a general sense, why should we act. Afterall, we have a responsibility, its a responsible institution,” Das said.
“We are completely focussed on nudging the regulated entity to take corrective actions…And sufficient time is given for undertaking such corrective action. When such constructive engagement which we undertake, when that does not work or when the regulated entity does not effective action , we go for imposing supervisory or business restrictions.”
On January 31, RBI said that a Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in Paytm Payments Bank Ltd. Based on that, the central bank imposed various restriction on the bank.
Das reiterated that the action on Paytm company should only be seen as an action for the greater interest of customers.
“Such restrictions which we impose are always proportionate to the gravity of the situation,” he added.
Das said the RBI received queries and clarifications and it will issue a list of FAQs sometime next week on this issue.
On the overall fintech space, Das said RBI will always keep encouraging and supporting financial system and there should be no doubts on the contrary.
Deputy Governor Swaminathan, commenting on the Paytm matter, said, “As a matter of policy we don’t comment on individual entities but as the question is from most of you we will respond.”
“First, this is a supervisory action on a regulated entity for a persistent non-compliance. Second, such supervisory actions are invariably preceded by months at time and at times years of bilateral engagement, where we not only point out deficiencies, but provide more than adequate time for them to take corrective actions.”
“Third, as a regulator, its incumbent upon us protect the interest of the ultimate consumer and thereby protecting the stability of the financial system. These actions have to be seen in that particular context,” Swaminathan added.
On asked what lies ahead, the deputy governor said, “You will have to wait. Feedback we have been getting, and we will work on, and as a responsible regulator, suitable steps will be taken to ensure that customer inconvenience if any is minimised.”