RBI action against Paytm
The Paytm-RBI spat is a case of dissonance between young fintechs chasing hefty valuations and a disciplinarian regulator chaperoning the sensitive financial ecosystem. As a differentiated bank, payment banks like Paytm do need the vigour of a start-up to succeed in their mission for financial inclusivity through fast-paced, tech-enabled innovation. However, they must moderate their frenzy for user-base expansion, mindful of their fiduciary responsibilities and the fragile nature of the banking system with its far-reaching implications on the larger society and the economy. The RBI, which has refrained from providing specific reasons for its stringent action, must do so at the earliest to avoid discouraging responsible players and investors in the booming market.
Don’t curb innovation
Following a comprehensive system audit report and the subsequent validation report of external auditors revealing persistent non-compliances and continued material supervisory concerns, the RBI barred Paytm Payments Bank from accepting any bank deposits or undertaking any credit transactions in customer accounts, wallets, FASTags, and others after February 29. As Paytm is one of the largest fintech players in the country with over 300 million wallets and 30 million bank accounts and the largest issuer of FASTags, the RBI’s present action will have an adverse impact on customers and merchants. Given the rapid expansion of the digital system and especially financial transactions, stringent regulatory interventions cannot be faulted.
However, care must be taken to ensure regulatory interventions are not excessive and stymie innovation.
It refers to ‘Unhealthy practices’ (February 7). Cashless treatment is the most critical element of health insurance policy, because most of the time hospitalisation does not take place in a planned fashion. And anyone who buys health insurance does not want to go through the hassles at the hospital while admitting their family members.
It is heartening to learn about the “cashless everywhere” proposal mooted by the General Insurance Council.
But its implementation will take some doing because of the massive network of hospitals, both big and small. Since health insurance is a more technical product than life insurance, insurance companies have all the room to deny the claim. But this is where IRDAI will have to play its role and send a strong message to health insurance companies.
This refers to ‘Budget pre-empts monetary policy’ (February 7). We are into an era when monetary policy will have no independent relevance as its dependence on fiscal policy support is growing.
Post-pandemic, there were times when the central bank was really worried about the inflation target prescriptions.
At this stage, one expects the Centre to come forward with at least an expression of intention to manage resources outside the Budget — like domestic gold stock — productively, which can change the nation’s image in the eyes of global rating agencies.