Paytm Crisis: Vijay Shekhar Sharma Seeks Government Assistance, Receives Regulatory Reminder

Paytm founder and CEO, Vijay Shekhar Sharma, met Finance Minister Nirmala Sitharaman on Tuesday to seek assistance amid the crisis faced by Paytm Payments Bank due to regulatory actions by the Reserve Bank of India (RBI).

During the meeting, Sitharaman reiterated that the issue was regulatory in nature, signaling that the government's intervention might not be possible, as reported by Livemint.

Earlier the same day, Sharma had engaged with RBI officials in an attempt to address the challenges posed to his company. The central bank, however, declined to provide concessions, including the migration of users' accounts to other banks and an extension of the February 29 deadline, according to Moneycontrol.

Paytm had requested an extension of the deadline and sought clarity from the RBI on the transfer of its license for the wallets business and the digital highway toll payment service FASTag.

In response to the regulatory scrutiny, a group of startup founders penned a letter to Prime Minister Narendra Modi, Finance Minister Sitharaman, and RBI Governor Shaktikanta Das. The letter highlighted concerns about the potential detrimental consequences of the RBI's stringent regulations on Paytm Payments Bank and the broader fintech ecosystem.

As no relief appears imminent, Paytm is compelled to transfer accounts from Paytm Payments Bank to third-party lenders to ensure the seamless functioning of digital payments. Despite the ongoing crisis, shares of Paytm's parent company, One97 Communications, witnessed a second consecutive day of rallying, with the stock surging by 10% to trade at ₹496.