Following severe restrictions imposed by regulators on Paytm Payments Bank Limited (PPBL), Paytm founder and former chief Vijay Shekhar Sharma expressed confidence on March 5 that his digital payments pioneer would overcome regulatory challenges in India this year, as reported by Bloomberg on Tuesday.
Making his first public appearance at a financial technology conference in Tokyo since the Reserve Bank of India (RBI) directed his banking affiliate to halt certain operations, Sharma emphasized the importance of personal responsibility in handling setbacks. He stated, as quoted by Bloomberg, “The biggest thing that I’ve learned is that many times your teammate and adviser may not be getting it correct. And it is important for you, yourself to be taking care of it versus just letting a teammate or adviser suggest that what should it be.”
Sharma resigned from the PPBL board in February after the RBI prohibited the bank from accepting new deposits in its customer accounts or wallets. However, PPBL revamped its board following the regulatory action, appointing four new directors. Although Sharma, who owns 51 percent of PPBL, stepped down as a part-time non-executive chairman, he continues to lead Paytm, which he founded a decade ago.
The RBI imposed restrictions on PPBL after years of warnings due to concerns about the flow of money and data traffic between the tightly regulated bank and the rest of the Paytm ecosystem, leading to accounting and supervisory issues. The regulator directed PPBL to cease accepting fresh deposits from customers with effect from February 29, a deadline later extended to March 15.
Despite the challenges, Sharma emphasized the importance of regulatory oversight in fostering a healthy environment for startups in India. He acknowledged the rapid growth of startups and their significance in the financial landscape, stating, “Things become very big and systematically important, very fast. We have been able to very happily see our regulator engage.”
Since the RBI imposed restrictions on the bank on January 31, Paytm shares have declined by approximately 45 percent. Looking ahead, Sharma envisions Paytm becoming a leader in Asia’s financial ecosystem. He highlighted plans to establish new bank partnerships in the Indian market and expand into other Asian markets. Sharma emphasized the value of clarity in strategy, stating, “Ambiguity brings stress. When you are clear, when you know, then it is the perseverance on the mission that you are in.”
Addressing recent regulatory actions against PPBL, the Financial Intelligence Unit (FIU) imposed a fine of ₹5.49 crore on the bank for failing to implement an internal mechanism to detect and report suspicious transactions as required by anti-money laundering laws. PPBL responded, stating that the penalty pertained to issues within a discontinued business segment and that it had since enhanced its monitoring systems and reporting mechanisms to the FIU.
