FM Sitharaman to meet fintech companies, regulators today

'The idea is to act as a mediator between fintech companies and regulators and hear out their concerns. The message that will be conveyed that in spite of the Paytm issue, the authorities have faith in the fintech ecosystem,' said a senior government official.

Finance Minister Nirmala Sitharaman is expected to meet with India’s major fintech players on Monday. In the meeting, which is expected to also be attended by representatives of regulators, including the Reserve Bank of India, Sitharaman is likely to hear the fintech companies’ worries and tell them to ensure they are in compliance with all laws and regulators.

“The idea is to act as a mediator between fintech companies and regulators and hear out their concerns. The message that will be conveyed that in spite of the Paytm issue, the authorities have faith in the fintech ecosystem, as long as they are in compliance,” a senior government official aware of the meeting’s agenda told DH.

Top representatives from fintech companies such as Paytm, PhonePe, GooglePay, Razorpay and others are expected to attend the meeting on Monday, in New Delhi.

The meeting comes in the backdrop of the RBI’s strong action against Paytm Payments Bank (PPB). The regulator has barred PPB from facilitating deposits, credit transactions and top ups in customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards (NCMC) and other financial instruments, from March 15 onwards, due to persistent lack of regulatory compliance and continued material supervisory concerns.

“The RBI acting on a particular company for lack of diligence is one thing, but that doesn't mean that we should question the entire fintech sector,” Sitharaman had told DH in an interview earlier this month, and it is understood that the same message will be conveyed to the fintech companies.

RBI Governor Shaktikanta Das had said, earlier this month, that the regulatory action by the central bank has been taken after much consideration and deliberation and there is hardly any scope for review.

However, to provide relief to customers using Paytm UPI handle (@paytm), the RBI has asked the National Payments Corporation of India (NPCI) to examine the possibility of migrating the users from PPB to 4-5 other banks.

Paytm claims to have around 30 crore wallet users. The RBI’s clampdown on its payments bank arm has led to uncertainties and hit the company’s business and user base badly. Share price of One97 Communication Ltd (OCL), which owns the Paytm brand, has crashed by over 50% since the RBI’s order on January 31.

 The RBI has also warned about unsecured retail lending, especially through fintech apps, and how this could be a major problem for the Indian banking system going ahead.