The Reserve Bank's regulatory action on Paytm Payments Bank has drawn the attention of fintech firms to the importance of complying with laws, Union Minister Rajeev Chandrasekhar has said.
The minister stressed that regulatory compliance cannot be "optional" for companies, rather it is an aspect every entrepreneur must pay full attention to.
In an interview to PTI, Chandrasekhar - the minister of state for electronics and IT - said the issue of Paytm Payments Bank is a case where a hard-charging and aggressive entrepreneur has failed to realise the need for regulatory compliance, and that no company can get away if it is non-compliant with law.
Any company, be it from India or abroad, big or small, has to abide by the law of the land, the Minister asserted amid the unfolding Paytm Payments Bank Ltd (PPBL) crisis.
The Reserve Bank of India (RBI) has barred PPBL from accepting new deposits from March 15, and ruled out any review of its action against the company.
Chandrasekhar said the notion that RBI action on PPBL had rattled fintechs, was not a correct characterisation. The politician, entrepreneur, and technocrat expressed disagreement with the idea that the issues surrounding Paytm Payments Bank had caused concerns for the entire fintech industry. He stated that the regulatory action by RBI against Paytm Payments Bank has not significantly impacted the fintech industry. He emphasized the importance of regulatory compliance for fintech entrepreneurs and highlighted the need to adhere to the law. Additionally, he mentioned that entrepreneurs often become too focused on their business and may overlook regulatory rules. Furthermore, he discussed the stakeholding of One97 Communications Limited in PPBL and the actions taken by RBI to address non-compliances. He also mentioned the shift of the nodal account from Paytm Payments Bank to Axis Bank and its implications for the continuity of services. Finally, he acknowledged the tendency of entrepreneurs to prioritize building their business over understanding and complying with regulatory requirements.
An engineer by qualification, Chandrasekhar has worked in a team at PC chip maker Intel that developed pentium processors. In 1994 he started his journey as entrepreneur with his telecom services company BPL Mobile and exited from the company in 2005. Thereafter he set-up his investment and financial services firm Jupiter Capital.
"I have said all along and this is a position of the government of India, regardless of where you come into the digital economy from India or abroad, whether you have a big or a small firm in the digital economy, FinTech or AI, the rules in the law of the land has to be complied with.
In the FinTech space, the regulator who lays down the rules is the RBI. So, you have to listen to the RBI and you have to comply with the RBI," the minister said.
