As more or less confirmed by RBI in FAQ, scenario 1 should play out. I am almost sure that there is no salvation for paytm payment bank as tbh there is not much this bank doing other than acting as PSP for paytm and it was good idea as PayTM had reach ppl so ppl can take advantage of having account putting 2 lacs in FD (this is done in partnership in this case it was Indusind bank) in rural areas and it can’t lend so not much use of CASA. what is use of payment bank if you do not allow play it with different business modal like India post payment bank. To be sure, PayTM gave reasons for this action in terms of KYC loopholes. My gut feeling is also saying that disbursement number of PayTM somewhat made regulator uncomfortable and if you see since 2020 there are many new regulation, earlier RBI used to focus on deposits safety and aspects thereon but now it want to have A-Z tracking of 1 rupee that can’t be done without tracking payment provider so they had asked for PA license, PPI license and if you search online you will get number of new rules/regulations were launched - traditional banks operate in boundary so there is not much chance of accident so it will hurt most fintech player who play on edge but that’s what make boundary expansion - I do not think Bank can play role of innovator. UPI and Payment bank both was launched when Mr. Rajan was governor so you can get sense how it impact the industry who are the head of regulator. I can go on but I think i should stop now otherwise it will bore readers.
About PayTM specific, no option but to wait. At least we have light at end of tunnel as UPI will keep working.
Thanks!
Disc. Holding Paytm so may be biased.
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