CAT Interview Preparation for admission into top IIMs requires you to know about the latest news that are related to various business, especially those that impact masses. Therefore you need to know about this development in Paytm.
Recently, there has been controversy surrounding the digital payments brand Paytm, with the Reserve Bank of India (RBI) issuing a statement regarding Paytm Payments Bank (PPBL). Paytm, short for "pay through mobile," is an Indian multinational financial technology company specializing in digital payments and financial services, and is one of India's leading digital payment platforms. PPBL, established in 2017 and headquartered in Noida, is an Indian payments bank that obtained a license from the RBI to operate as a payments bank in the same year, officially launching in November 2017. In 2021, PPBL attained scheduled bank status from the RBI. It offers savings and current accounts along with a debit card to facilitate quick and convenient payments.Paytm has 330 million digital wallet accounts, which many people in our country use to transfer funds, pay bills and make retail payments.
Paytm Payments Bank is the regulated banking entity that accepts the deposits for the Paytm users to then make transactions on the app. The Paytm app's real-time payment interface falls under the RBI regulations and after Feb. 29 the central bank has barred Paytm users from depositing any funds in the Paytm Payments Bank.Action Taken by the RBI:
On January 31st, the Reserve Bank of India (RBI) prohibited Paytm Payments Bank from accepting customer deposits beyond February 29th due to an audit uncovering "persistent non-compliances" and ongoing supervisory concerns. This regulatory action comes nearly two years after the payments bank faced restrictions on new customer onboarding. Furthermore, it has been directed not to accept deposits, credit transactions, top-ups, or any such activities in customer accounts, prepaid instruments, wallets, FASTags, or NCMC cards after February 29th, 2024. The RBI invoked Section 35A of the Banking Regulation Act, 1949, to enforce this decision, aiming to rectify irregularities in Paytm Payments Bank's operations and ensure adherence to regulatory standards.The order led to a 35% decline in Paytm's stock price, erasing $2 billion in investor wealth.Section 35 A, Banking Regulation Act:Section 35A of the Reserve Bank of India Act empowers the Reserve Bank to issue directions under certain circumstances. If the Reserve Bank is convinced that it is necessary:
a. In the public interest,
b. In the interest of banking policy, or
c. To prevent detrimental conduct to the affairs of a banking company or to safeguard the interests of depositors or the banking company itself. Also to ensure proper management of any banking company, it may issue directions as deemed appropriate. Banking companies are obliged to adhere to such directions. The Reserve Bank also reserves the authority to modify or annul any direction, either upon request or on its own initiative. Any modification or annulment may include additional conditions as deemed necessary by the Reserve Bank.
Comments