The Reserve Bank's regulatory action on Paytm Payments Bank has drawn the attention of fintech firms to the importance of complying with laws, Union Minister Rajeev Chandrasekhar has said.

The Minister stressed that regulatory compliance cannot be "optional" for companies, rather it is an aspect every entrepreneur must pay full attention to.

In an interview with PTI, Chandrasekhar, the Minister of State for electronics and IT, said the issue of Paytm Payments Bank is a case where a hard-charging and aggressive entrepreneur has failed to realise the need for regulatory compliance, and that no company can get away if it is non-compliant with law.

“Any company, be it from India or abroad, big or small, has to abide by the law of the land,” the Minister asserted amid the unfolding Paytm Payments Bank Ltd (PPBL) crisis.

The Reserve Bank of India (RBI) has barred PPBL from accepting new deposits from March 15, and ruled out any review of its action against the company.

Chandrasekhar said the notion that RBI action on PPBL had rattled fintechs, was not a correct characterisation. He disagreed that the Paytm Payments Bank issue had raised worries about detrimental consequences for the entire fintech industry.

Chandrasekhar further said that entrepreneurs typically tend to get so sharply focused on what they are building, that at times, they may lose sight of rules that have been laid down by regulators.

PPBL is an associate of One97 Communications Limited.

One97 Communications holds 49 per cent of the paid-up share capital (directly and through its subsidiary) of PPBL. Paytm Founder and CEO Vijay Shekhar Sharma has a 51 per cent stake in the bank.

RBI has advised customers and merchants of PPBL to shift their accounts to other banks by March 15, giving 15 more days to the embattled company to close most of its operations, including deposit and credit transactions.

RBI has cited persistent non-compliances and continued material supervisory concerns for the regulatory action.

RBI in the list of FAQs (frequently asked questions), issued on Friday, clarified that Paytm QR code, Paytm Soundbox or Paytm POS terminal will continue to work after March 15, if it is linked to other banks instead of PPBL.

Fintech firm One97 Communications has shifted its nodal account to Axis Bank from Paytm Payments Bank, a move that will allow continuity of Paytm QR, Soundbox, card machine after the March 15, deadline set by the central bank. The nodal account of Paytm is like a master account in which all its customers and merchant transactions are settled.

In the fintech space, the regulator who lays down the rules is the RBI. So, you have to listen to the RBI and you have to comply with the RBI," the Minister said.

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