A group of Indian startup entrepreneurs writes to the RBI, Finance Minister, and PM Modi pleading with them to lift the Paytm ban

A group of Indian startup entrepreneurs writes to the RBI, Finance Minister, and PM Modi pleading with them to lift the Paytm ban

The Reserve Bank of India's severe instructions on Paytm Payments Bank, according to a letter signed by at least 12 founders, might have "detrimental consequences for the fintech ecosystem."

The Reserve Bank of India increased its restrictions on Paytm Payments Bank a few days ago.

A group of entrepreneurs has written to the Reserve Bank of India, Finance Minister Nirmala Sitharaman, and Prime Minister Narendra Modi, pleading with them to reevaluate the recent prohibitions on Paytm and have a positive conversation with the fintech community.

At least twelve of the founders have signed the letter, which Moneycontrol was able to see.

Signatories include people like Murugavel Janakiraman of Bharat Matrimony, Deepak Shenoy of CapitalMind, Ritesh Malik of Innov8, Vishal Gondal of GOQii, Yashish Dahiya of PB Fintech, and Rajesh Mago of MakeMyTrip, according to a source.

Some people did not reply to email asking for confirmation that they signed the letter, although Shenoy and Janakiraman acknowledged doing so. Once further identities are verified as having signed the documents, Moneycontrol will update this report.

The Indian fintech and startup industry as a whole, however, has responded to the letter with a lackluster show of support. According to at least four founders who talked with Moneycontrol, they decided against it since they thought it was a Paytm-specific problem and didn't want to irritate the regulator.

"The regulator (RBI) doesn't like to be backed into a corner," said the creator of unicorn, who later signed the letter, according to Moneycontrol.

The RBI's "current, seemingly punitive, regulations imposed towards Paytm Payments Bank may have expansive and detrimental consequences for the entire fintech ecosystem," corresponding to a version of the founders' letter that Moneycontrol read.

The letter said, "To protect the best interests of customers as well as merchants, the strict nature of the recent directives needs to be re-evaluated, as it also affects millions of users of Paytm Payments Bank."

The letter also asserts that the country's reputation as a business-friendly nation may be impacted by the prohibition on Paytm Payments Bank.

The letter states, "Too strict regulations aimed at prominent fintech innovators such as Paytm Payments Bank could give the impression of being inconsistent and unpredictable, which could discourage investors and innovators from joining the Indian market."

The founders requested in the letter that RBI's regulatory guidelines be reviewed and that Paytm Payments Bank be given a timetable for resolving the differences and participating in open communication and collaboration.

"...to reassess the proportionality of the limitations in light of their possible effects on the fintech industry, Paytm Payments Bank, and the overall economy." Setting a realistic deadline for improvement: Paytm will rectify the observed shortcomings and show The letter's two bullet points said, "To provide a clear as well as practical window to Payments Bank compliance."

The Reserve Bank of India placed a significant restriction on Paytm Payments Bank a few days ago due to the company's flagrant disrespect for legal laws and regulatory norms.

According to a Moneycontrol article from February 5, Paytm founder Vijay Shekhar Sharma promised there wouldn't be any layoffs since the business is partnered with other banks and has ties to the RBI.

We don't know everything—for example, precisely what went wrong. However, we will soon learn everything. During the roughly hour-long conversation with 800-900 workers, the entrepreneur said, "We will approach the RBI to see what can be done."

The company that operates Paytm, One97 Communications Ltd (OCL), is now seeking a bank partnership to transfer all Paytm Payments Bank Ltd accounts. However, Moneycontrol has learned that at least six bank executives from the public and private sectors were reluctant to take on the project.

Following the RBI decision, six top banking executives from major private and public sector banks said that they are reluctant to work with Paytm and have waited to engage with the company until they get more information about the reasons for the RBI move as well as from the OCL. Anticipating honesty and clarity.