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A group of approximately 12 startup founders has expressed their support for Paytm and called on Prime Minister Narendra Modi and the Reserve Bank of India (RBI) to reconsider the recent sanctions imposed on the company’s financial services arm. In a letter, the founders emphasized the need for a constructive dialogue with the fintech ecosystem to address the concerns raised by the RBI’s regulations against Paytm Payments Bank (PPB). They warned that these punitive measures could have far-reaching and detrimental consequences for the entire fintech industry. The letter also highlighted the potential impact on India’s image as a business-friendly nation. Notably, the founders faced limited support from the wider startup ecosystem due to concerns about antagonizing the central bank.
The RBI recently imposed restrictions on Paytm Payments Bank, including a prohibition on accepting further deposits and crediting any transactions on customer accounts or digital wallets after February 29. This move sent shockwaves through the startup community, causing confusion among Paytm’s 300 million customers and 20 million merchants. The crisis had a significant negative impact on Paytm shares, and the company anticipates a potential Rs 300-500 crore impact on its annual Ebitda as a result of the RBI’s actions.
In addition, Paytm denied reports of any Enforcement Directorate action against its parent company, One97 Communications, or its founder Vijay Shekhar Sharma, regarding money laundering allegations. Paytm was founded by Sharma in 2009 and its affiliate PPB obtained its license in 2015, commencing operations in November 2017.
Several startup founders have written to Prime Minister Narendra Modi and the Reserve Bank of India (RBI), urging them to review the restrictions imposed on digital payments platform Paytm. The letter comes in response to the recent controversy surrounding Paytm’s app being temporarily removed from the Google Play Store for allegedly violating policies related to gambling. The founders argue that Paytm’s suspension highlights the need for clarity and fairness in app store policies. They call for a fair and transparent process, along with greater scrutiny of app store policies to prevent unfair treatment of Indian startups.
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