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Thursday, February 22, 2024
HomeBusinessAshneer Grover on Paytm crisis: 60-year-olds running RBI don't...

Ashneer Grover on Paytm crisis: 60-year-olds running RBI don’t…

Disappointed by the lack of legislation, Grover said: “There appears to be a $20 billion glass ceiling and by the time it is reached, it appears the only way forward is down. Structurally, in India we are not prepared for large emerging companies. In the last 10-12 years, startups in India have emerged organically, and people in the government are eager to click photos with the founders, but in terms of legislation there has been no movement.”

“We have 111 unicorns, but none of them are considered systemically important to the economy, but these startups have driven the 6 to 7.5 per cent GDP growth rate that we celebrate. They have attracted maximum FDI in India and have created a maximum number of jobs. But we see zero legislative support and as they grow you see these public problems,” he added.

Paytm ‘father of all fintechs’, says Grover

Acknowledging Paytm’s pioneering role in India’s fintech landscape, Grover said the company is the cornerstone of several fintech companies, including BharatPe. He added that while he is the founder of BharatPe, the company owes its existence to Paytm and said, “Paytm is the father of all fintechs in India. If it did not exist, BharatPe would not have existed.”

“They (Paytm) introduced and developed the behaviors of scanning a QR code to help the flow of money in India. The ecosystem was built after Google Pay, PhonePe came on the consumer side and BharatPe and Pine Labs on the merchant side. So for the startup community, this is sad,” he said, referring to the central bank’s actions.

Grover criticizes RBI’s stance

Grover, criticizing the RBI’s stand, argued that the punishment of canceling the license was severe. He attributed this decision to a lack of faith in young people, especially those around 40 years old, considered nonconformists in the field.

According to Grover, regulatory skepticism is rooted in the traditional beliefs of the 60-year-olds at the helm of such decisions at the RBI, who may not fully trust people with computer science or programming expertise to run complex systems properly. effective.

“At the RBI, the people responsible for making decisions and taking calls are usually around 60 years old. They have experience in managing a banking system. However, there seems to be a lack of confidence in a 40-year-old, especially if” “They are considered Mavericks to run a mainframe,” he said.

“This lack of faith is seen among those in power and involved in making regulations in India. In particular, there is skepticism towards a 40-year-old with experience in computing or programming when it comes to run any system. This sentiment “seems to be a manifestation of a broader perspective within the institution,” he added.

The message is “fintech is not important,” says Grover

Grover noted that Paytm was the country’s first startup to get a payments bank license almost five years ago, and was set to receive a small finance bank license as a “logical follow-up” in the due course of expansion. To this, he added that the revocation of PPBL license by the RBI has now also denied the potential small finance bank licence.

He questioned the rationale for this decision, attributing it to the perspective that innovators and pioneers often operate on the margins, leading to disagreements over whether these boundaries are exceeded.

“In the RBI’s view, Paytm is not systematically important, ‘if it dies, it dies, what do we care?'” He said the action against Paytm is a punitive punishment compared to the actions taken against banks. “I think it is a overreach.”

The Paytm saga so far…

Paytm founder and CEO Vijay Shekhar Sharma is facing a serious crisis as his brainchild and India’s beloved unicorn success story PPBL is governed by strict directives issued by the RBI. The instructions are to suspend new deposits, credit transactions and top-ups to customers’ accounts after February 29, raising concerns about the bank’s future viability.

According to the National Payments Corporation of India (NPCI), PPBL led UPI transactions in December, with Rs 283.5 crore received and Rs 41 crore remitted. In the same month, PPBL app recorded 144.25 crore transactions amounting to $16,569.49 million rupees.

The RBI cracked the whip for irregularities in know-your-customer norms, compliance issues and related party transactions. The intervention arises out of concerns over money laundering and questionable transactions involving crores of rupees. Non-KYC compliant accounts and instances of single PANs used for multiple accounts raised red flags.

According to a Reuters report, PPBL came under RBI scrutiny when it was found that hundreds of thousands of accounts were created without proper identification. The RBI alerted the Enforcement Directorate (ED) and other government agencies about the irregularities in the PPBL accounts.

Responding to the developments, the Paytm founder and CEO assured users about the app’s functionality beyond February 29. In a post on February 2, he appreciated the support and commitment of Paytm users, emphasizing the company’s dedication to serving the nation in full compliance with one approach. on payments innovation and financial inclusion.

In multiple statements, the company said that Paytm management remains in ongoing discussions with the RBI to comply with the directives.

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Posted: Feb 10, 2024, 09:45 am IST

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