Union Minister Rajeev Chandrasekhar has strongly supported the Reserve Bank of India's regulatory measures against
Paytm Payments Bank
, emphasising that these actions have underscored the necessity of legal compliance for fintech companies.
The Minister of State for Electronics and IT Chandrasekhar said in an interview to news agency PTI that adherence to regulations is not a choice but a mandatory requirement for all businesses. He used the Paytm Payments Bank situation as an example of an ambitious entrepreneur overlooking the importance of
regulatory compliance
, warning that no company can escape the consequences of non-compliance.
Amid the ongoing crisis at Paytm Payments Bank Ltd (PPBL), the minister reiterated that every company, regardless of its size or origin, must respect the laws of the land. The Reserve Bank of India (
RBI
) has prohibited PPBL from accepting new deposits since March 15 and has dismissed any possibility of reconsidering its decision.
Entrepreneurs and startups have this 'genetic flaw'
He said entrepreneurs and startups have a 'genetic flaw' that they get focused on what they're building and sometimes forget to understand there are some rules that have been laid down by the regulators.
"So I will put this down to that type of an error where a hard-charging entrepreneur, believes in himself, is building a company successfully (but) fails to realise that there are some regulatory do's and don'ts and there can never be a situation whether it's a social media company, or a fintech company, where somebody is not compliant with the law and expects to get away with it," the minister said.
RBI action not against fintech industry
Contrary to the perception that the RBI’s action against PPBL has unsettled the fintech sector, Chandrasekhar disagreed, stating that it has instead made fintech entrepreneurs more aware of their legal obligations. He emphasised that regulatory compliance is not optional anywhere in the world, especially not in India, and entrepreneurs should give it the attention it deserves.
The Minister pointed out that entrepreneurs often become so engrossed in their ventures that they might overlook the regulations set by authorities. He admitted that he himself was once a startup and understands that entrepreneurs tend to be so focused on their projects that they sometimes forget to abide by the rules set by regulators.
Chandrasekhar concluded by saying that no matter where a company operates in the digital economy, whether it’s a large or small firm, in FinTech or AI, it must comply with the laws of the land. In the FinTech sector, the RBI sets the rules, and companies must heed and comply with the RBI’s regulations.
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