'RBI Knows Better': Uday Kotak On The Ongoing Scrutiny Of Paytm

Uday Kotak, the Founder and non-executive director of Kotak Mahindra, recently addressed the RBI’s actions against Paytm Payments Bank and shared insights on India’s economic growth prospects. Speaking at the All Indian Management Association (AIMA) event in Delhi, Kotak talked about the importance of financial regulators swiftly addressing emerging issues.

Kotak stressed that to achieve the target of becoming a $30 trillion (Rs 24 lakh crore) economy by 2047, India needs a growth rate of 7.5 to 8 per cent. He advocated for proactive measures by financial regulators, cautioning against excessive rigidity. Kotak highlighted the need for prompt corrective actions to address challenges in the financial sector, stating, “Zero accident policy is also dangerous. If you want to grow fast, there will be a need for good regulations. We may have some accidents but it is also how fast we respond and correct the accident.”

Regarding the ongoing scrutiny of Paytm by the Reserve Bank of India (RBI) over alleged KYC irregularities, Kotak refrained from commenting on individual companies but expressed confidence in the RBI’s regulatory capabilities, stating, “RBI knows better than you and I.”

The Financial Intelligence Unit (FIU) submitted a report to the RBI highlighting KYC breaches by payment banks, including Paytm Payments Bank. This raised concerns about potential money laundering activities. In response, the RBI imposed a deadline of February 29, later extended to March 15, for Paytm Payments Bank to halt transactions due to operational irregularities and KYC issues. RBI further urged customers and merchants to transfer their accounts from Paytm Payments Bank by March 15.

At the AIMA event, Kotak commended the RBI for its commendable regulatory efforts, particularly in ensuring financial stability during the COVID-19 pandemic. He acknowledged the RBI’s role in maintaining stability despite challenging circumstances.

Uday Kotak’s remarks underscore the importance of proactive regulatory measures to foster sustainable economic growth and ensure the integrity of the financial system. As the RBI continues its investigation into Paytm Payments Bank, stakeholders await further developments and regulatory actions to address the identified issues effectively.