As the Reserve Bank of India (RBI) continues its probe against Paytm Payments Bank and its alleged KYC irregularities, veteran banker Uday Kotak backed the move of the central bank on the recent developments.
While speaking regarding the ongoing Paytm Payments Bank (PPBL) matter, Kotak said he would not like to comment on individual company but said “RBI knows better than you and I.”
Against the backdrop of the Paytm crisis, Kotak also said that regulators should not be too conservative and cautious but should respond fast to “accidents” in the financial sector.
Speaking at an event organised by AIMA (All India Management Association) in Delhi, Uday Kotak said, “Zero accident policy is also dangerous. If you are wanting to grow fast, there will be need for good regulations. We may have some accidents but it is also how fast we respond and correct the accident.”
The veteran banker further said that RBI has done a phenomenal job as a regulator in the last few years, and ensured financial stability along with good macroeconomic management despite the coronavirus (Covid-19) pandemic.
This comes after RBI imposed a deadline of March 15 on Paytm Payments Bank for halting its transactions as it discovered multiple irregularities within the operations of the bank, including KYC issues.
Last week, RBI advised customers as well as merchants of PPBL to shift their accounts to other banks by March 15, giving 15 more days to the beleaguered entity to close most of its operations, including deposit and credit transactions.
RBI crackdown against Paytm Payments Bank
The Reserve Bank of India last week urged all Paytm Payments Bank customers to shift their accounts and assets to other backs, imposing a deadline of March 15. After this, all deposits and credit transactions for the bank will be stopped and PPBL operations will be halted.
The Financial Intelligence Unit (FIU) has submitted a report to RBI pointing out major KYC breach by the payments bank, with thousands of accounts not having proper KYC documents, raising concerns over money laundering.
Paytm, soon after RBI’s deadline notice, has signed a partnership deal to shift its nodal account to Axis Bank. Further, Paytm is also seeking to explore options regarding shifting its UPI operations.
