A file photo of M. Damodaran, former Chairman, Securities and Exchange Board of India (SEBI).
| Photo Credit: SOMASHEKARA GRN

An advisory committee, set up by Paytm owner One97 Communications after the Reserve Bank of India’s action on its payments bank business, is at a stage of engagement with the company on matters related to the terms of reference for the panel, the panel’s head and former SEBI chairman M. Damodaran said.

“We have been engaging with the group on matters relating to the Advisory Committee’s terms of reference,” Mr. Damodaran said on February 26 in response to a query about his engagement with Paytm. He said that the panel members are external advisors and presently Paytm is engaged in dealing with the RBI.

Mr. Damodaran is the head of Paytm’s group advisory committee which will advise the company on strengthening compliance and on regulatory matters. The committee was set up on February 9.

Also read: Paytm Payments Bank meltdown, its meaning | Explained

On January 31, the RBI asked PPBL (Paytm Payments Bank Ltd) to stop further deposits, credit transactions, or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, and National Common Mobility Cards, after February 29. Later, the central bank extended the deadline till March 15.

Meanwhile, the Reserve Bankb on Feb, 23 asked the National Payments Corporation of India (NPCI) to examine the possibility of migrating Paytm Payments Bank customers using the UPI handle ‘@paytm’ to 4-5 other banks, in a bid to prevent any disruptions in the payment ecosystem.

Mr. Damodaran was speaking at the release of his biography ‘The Turmeric Latte’ compiled by one of his former colleagues. During a panel discussion at the event, when he was asked about his views on the current functioning of SEBI, he said the capital markets regulator has bandwidth problems with respect to the large amount of issues that it has to handle. “SEBI has a huge challenge. The bandwidth seems inadequate to tackle the large number of issues that they have to tackle. In the process, it sometimes feels like they are biting more than they can chew,” he said.

Paytm app is seen on a smartphone in this illustration image. File
| Photo Credit: Reuters

Traders’ body CAIT on February 4 issued a cautionary advisory to traders to switch from Paytm to other payment options for business-related transactions following RBI curbs on Paytm wallet and bank operations.

“The Reserve Bank of India has imposed certain restrictions, prompting CAIT to recommend that users take proactive measures to protect their funds and ensure uninterrupted financial transactions. Large number of small traders, vendors, hawkers and women are making payments through Paytm and as such RBI restrictions on Paytm could lead financial disruption to these people,” the Confederation of All India Traders (CAIT) stated.

Money laundering concerns and questionable dealings of hundreds of crores of rupees between popular wallet Paytm and its lesser-known banking arm had led Reserve Bank of India to clamp down on tech poster boy Vijay Shekhar Sharma-run entities, according to sources.

The central bank has ordered Paytm Payments Bank Ltd (PPBL) to halt most of its business including taking further deposits, conducting credit transactions and carrying out top-ups on any customer accounts, prepaid instruments, wallets, and cards for paying road tolls after February 29.

This means customers can access their existing deposits and pay for services with money stored in their wallets till February 29. And in case, RBI does not relent, top-up for Paytm wallet will stop and transactions through it would no longer can be carried.

CAIT Secretary General Praveen Khandelwal said that the recent restrictions imposed by RBI on Paytm have raised concerns about the security and continuity of financial services provided by the platform.

He emphasised the urgency of this advisory, urging traders to act promptly and make informed decisions to mitigate any potential adverse effects on their financial operations.