Being a fintech or technology company does not absolve it from regulatory oversight: MoS

Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar on Saturday stated that a sectoral regulator has absolute authority to take action within its sector and being a fintech or technology company does not absolve them from regulatory oversight.

“A sector regulator has absolute power to regulate any company that is a regulated entity within the sector. The Reserve Bank of India (RBI) has done this and it is within their jurisdiction. Being a fintech or a technology company does not exempt anyone from regulatory scrutiny,” Chandrasekhar said on the sidelines of an event in Delhi.

He was speaking at the inauguration of Digital India FutureLABS at the Indian Institute of Information Technology (IIIT), New Delhi.

Noida-based fintech giant Paytm has come under RBI probe and seen restrictions on the functioning of Paytm Payments Bank (PPBL) in taking fresh deposits and credit transactions across its services, due to non-compliance with regulatory and supervisory issues.

The action has had serious consequences for the company. Shares of One 97 Communications, the parent company of fintech giant Paytm, fell 20 percent for the second day in a row to Rs 487.05 on the BSE in Friday’s trade after RBI halted almost all transactions of its digital payments unit PPBL .

Vijay Shekhar Sharma, founder and CEO of One97 Communications, Paytm’s parent company, said in an analyst call that compliance will be a primary focus for the company.

“The most important thing for us to remember is that if we don’t make compliance and risk a core part of the business, it won’t be the larger business we envision. As far as the group and the entity are concerned, we are now looking at compliance first, and then technology,” said Sharma.

First print: February 3, 2024 | 10:01 PM IST