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India\u2019s central bank said Thursday it takes supervisory actions and imposes business restrictions only after \u201cpersistent non-compliance\u201d with rules, its first comment after a clampdown on Paytm last week has posed existential questions about the future of the leading financial services firm.<\/p>\n
Shaktikanta Das, the Reserve Bank of India governor, said the central bank always engages with regulated entities bilaterally and nudges them to take corrective action. If the central bank takes actions, \u201cit is always proportionate to the gravity of the situation,\u201d said Das, pictured above, in a media briefing.<\/p>\n
\u201cAll our actions, being a responsible regulator, are in the best interest of systemic stability and protection of depositors\u2019 or customers\u2019 interest,\u201d he added.<\/p>\n
The Reserve Bank of India widened its curbs on Paytm\u2019s Payments Bank<\/a>, an associate entity of Paytm that processes transactions for the financial services group, barring it from offering many banking services, including accepting fresh deposits and credit transactions across its services.<\/p>\n \u201cThis is supervisory action for persistence non-compliance,\u201d the RBI deputy governor Swaminathan J said at the media briefing. \u201cSuch action is invariably preceded by months and sometimes years of bilateral engagement where we point out the deficiencies but also give time to take corrective action. As a regulator, it is incumbent upon us to protect the consumer,\u201d he added.<\/p>\n Shares of Paytm declined by 10% Thursday, shrinking its market cap to $3.4 billion. Paytm, which went public with a market cap of about $20 billion in 2021, was trading at $5.8 billion<\/a> before the RBI\u2019s order last week.<\/p>\n A group of founders in India recently wrote to the regulator and the Ministry of Finance, cautioning that the central bank\u2019s action can impede innovation. Das said Thursday that the Reserve Bank of India will always \u201cencourage and support innovation and technology in the financial sector.\u201d<\/p>\n The Reserve Bank of India plans to comment more on Paytm next week, the officials said. The central bank has weighed revoking Paytm Payments Bank\u2019s license<\/a> in recent days, TechCrunch first reported last week.<\/p>\n It has also weighed ordering a top management shakeup at Paytm Payments Bank and removing some of the company officials from the bank unit, including Paytm founder Vijay Shekhar Sharma, according to three people familiar with the matter.<\/p>\n<\/p><\/div>\n