Restrictions on PPBL Won't Affect Almost 85% of Paytm App Users: RBI Governor

Reserve Bank of India Governor Shaktikanta Das reassured on Wednesday that the recent restrictions imposed on Paytm Payments Bank Ltd (PPBL) would likely have minimal impact on approximately 85% of users of the Paytm payment wallet. He explained that most users have their wallets or apps linked to other bank accounts, thereby mitigating the effects of the clampdown. Das emphasized that the regulatory actions by the RBI won't disrupt the financial transactions of the vast majority of Paytm's app users. He further advised the remaining users to link their apps to alternative bank accounts to avoid any potential inconvenience.

The Reserve Bank of India (RBI) has instructed Paytm Payment Bank (PPBL) to transfer the remaining Paytm wallet users, whose accounts are solely linked to the payment bank, to alternative banking institutions.

In an interview with ET Now, the governor stated, Approximately 80-85% of Paytm's users conduct their transactions through banks other than Paytm Payments Bank, so they will not be affected by this regulatory measure. The primary challenge lies in facilitating the migration of the remaining 10-15% of Paytm's PPBL users who need to switch to other banking providers."

Das stated that the RBI has advised the payments bank to transition its user base to other banks before the deadline. Additionally, customers of the bank are urged to link their Paytm accounts to other banks before March 15. 

The governor also hinted that the central bank is unlikely to extend the March 15 deadline given to PPBL. "RBI is and remains fully supportive of fintech.RBI is all for fintech to grow," Das told ET Now in an interview. 

While explaining his point, Das likened the situation to owning and driving a Ferrari, emphasizing the importance of obeying traffic rules to avoid accidents. He noted that even the National Payments Corporation of India (NPCI), the retail payments and settlement body, is working closely with various banks to ensure the smooth onboarding of such customers.

After these regulatory measures, Paytm Payments Bank Limited witnessed alterations in its board composition. In the previous month, Promoter Vijay Shekhar Sharma resigned as part-time non-executive Chairman of Paytm Payments Bank Limited, leading to a restructuring of the bank's board.

Following recent regulatory actions, Paytm Payments Bank Limited experienced changes in its board composition. Last month, Promoter Vijay Shekhar Sharma resigned from his role as part-time non-executive Chairman of Paytm Payments Bank Limited, leading to a reconstitution of the bank's board.

Currently, the bank board includes former Central Bank of India chairman Srinivasan Sridhar, former Bank of Baroda Executive Director Ashok Kumar Garg, and two retired Indian Administrative Service (IAS) officers.

Shifting focus from Paytm Payments Bank and Paytm wallet, Das also provided commentary on economic growth, forecasting a GDP growth rate of close to 8% for the current year, with a projected growth of 7% for the next financial year. He highlighted that despite the latest inflation figure of 5.1%, which is 110 basis points above the 4% target, the trend in inflation is on a downward trajectory. The Reserve Bank of India (RBI) remains committed to achieving the 4% target sustainably.

Conclusion: 

Governor Shaktikanta Das assured the public, in summary, that the majority of Paytm Payments Bank users—roughly 85%—will not be significantly impacted by recent regulatory actions against the bank because they already use other banks for their transactions. He emphasised how urgent it is for the remaining customers to switch to other banks before the deadline of March 15. Even with the changes to the PPBL board, the RBI is committed to promoting economic expansion and efficiently controlling inflation. This demonstrates the central bank's dedication to preserving a robust and stable financial system in the face of changing regulatory environments.