Finance Minister Sitharaman tells RBI, regulators to meet fintech startups every month following Paytm fiasco

Finance Minister Nirmala has urged regulators to meet with startups and fintech firms monthly to address their issues while ensuring strict regulatory compliance, according to a report by The Economic Times.

The minister met with stakeholders from the fintech startup sector on Monday alongside senior government officials. This meeting comes amidst recent actions by the Reserve Bank of India (RBI) against Paytm Payments Bank (PPBL).

Following the meeting, the finance ministry outlined six action points. These include simplifying and digitizing Know Your Customer (KYC) processes across fintech segments and facilitating communication with law enforcement agencies to address fintech firms' concerns.

Addressing cybercrime concerns, the ministry highlighted plans to incorporate suitable measures in the new Digital India Act.

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Additionally, the ministry proposed a review of ownership changes in listed fintech companies to align with regulatory requirements. This move aims to ensure regulatory compliance within the industry.

Meanwhile, Vijay Shekhar Sharma resigned from his position as part-time chairman and board member of PPBL on Monday.

The finance minister emphasized the importance of regulators holding monthly virtual meetings to address any queries or concerns raised by startups and fintech companies.

During the meeting, there were no signs of anxiety or concerns specifically related to Paytm, according to officials.

In January, the RBI instructed PPBL to halt certain transactions by February 29, a deadline later extended to March 15. This action prompted a group of founders to petition the finance minister and RBI governor for a reassessment of restrictions.

Sitharaman acknowledged India's growing fintech ecosystem, highlighting recent initiatives by the central bank, such as a draft framework for Self-Regulatory Organizations (SRO) and workshops with Law Enforcement Agencies (LEAs) to address industry concerns.

Discussions during the meeting covered various topics, including KYC processes, data protection legislation, and taxation issues. Industry representatives expressed support for a common KYC system and appreciated the ministry's openness to their suggestions.

In a related development, Paytm's Vijay Shekhar Sharma has stepped down from the board of Paytm Payments Bank.

(With inputs from agencies)