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Startup Founders Rally Behind Paytm, Urge RBI to Reconsider Actions

A chorus of voices from the Indian startup ecosystem is calling on the Reserve Bank of India (RBI) to reconsider its recent regulatory actions against Paytm Payments Bank. This follows the RBI's directive for Paytm to cease onboarding new customers and halt key banking operations by February 29th, citing non-compliance and supervisory concerns.

Leading the charge are prominent startup founders like Yashish Dahiya (Policybazaar), Rajesh Magow (MakeMyTrip), Murugavel Janakiraman (Bharat Matrimony), and Ritesh Malik (Innov8). In a letter addressed to RBI Governor Shaktikanta Das and Finance Minister Nirmala Sitharaman, they express concern about the potentially "far-reaching and detrimental consequences" of the RBI's actions.

The founders argue that the impact could extend far beyond Paytm itself, potentially creating a "chilling effect" on the entire fintech sector. They believe this could discourage innovation and investment, hindering a critical engine of the Indian economy.

Their appeal highlights several key points:

  • Disproportionate Impact: The founders argue that the severity of the restrictions goes beyond addressing the specific compliance issues and could cripple Paytm's operations, impacting millions of users and livelihoods dependent on its services.

  • Collateral Damage: They express concern that the actions could create uncertainty and risk aversion throughout the broader fintech ecosystem, discouraging other players and hindering overall growth.

  • Call for Dialogue: The founders urge the RBI to engage in constructive dialogue with Paytm and the fintech industry to find a solution that addresses compliance concerns without stifling innovation and progress.

  • Opportunity for Rectification: They request a "clear and practical window" for Paytm to rectify the issues and demonstrate compliance with regulations.

The RBI's actions and the subsequent response from startup founders raise crucial questions about the balance between fostering innovation and ensuring financial stability. While ensuring compliance is critical, the potential impact on the fintech ecosystem and the broader economy cannot be ignored. It remains to be seen whether the RBI will heed the founders' call for a more nuanced approach or maintain its current course.


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