The Congress said the Reserve Bank of India’s (RBI) directive to Paytm Payments Bank, a wholly owned subsidiary of Paytm, to cease accepting new deposits will have the most significant impact on the common man. The party attributed this to the failure of the Narendra Modi government to keep a check on a ‘company with Chinese links, which has faced penalties before’.

In a post on X, Congress general secretary Jairam Ramesh on Wednesday said, “Why has a firm with Chinese links — at one point with 31 per cent Chinese ownership and Chinese investment of more than ₹7000 crore—which has previously been penalised by the RBI for noncompliance in 2022, not been kept under stricter monitoring?”

He added, “Does this have anything to do with Paytm’s vocal support on 9th November 2016 of the disastrous demonetisation decision?”

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Chinese shareholding in Paytm

Vijay Shekhar Sharma, the largest shareholder of One97 Communications Ltd., the owner and operator of fintech giant Paytm, has 19.42 per cent holding, while Antfin, an affiliate of China’s Ant Group Co, has 13.5 per cent.

ALSO READ- RBI’s action against Paytm Payments Bank explained

RBI’s order against Paytm Payments Bank

The Reserve Bank on Wednesday ordered Paytm Payments Bank to stop taking new deposits or top-ups in accounts, wallets, and other instruments from March 1. Existing customers may still get interest, cashbacks, or refunds credited back.

“No other banking services, other than those…like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc), BBPOU and UPI facility should be provided by the bank after February 29, 2024,” the RBI added.

PM Modi government brought chaos in banking system: Jairam Ramesh

The last 10 years under PM Modi have brought only chaos to the banking system, Congress MP Ramesh said.

“First, the disastrous demonetisation decision, taken without any planning and over objections of the RBI. Then, bankruptcy of IL&FS in 2018 hit the NBFC sector. Thousands of crores of scams were done at Yes Bank and DHFL in 2018 as well. Lakshmi Vilas Bank and PMC Bank failed as well. The Nirav Modi types got a free visa to abscond with public money. It is ordinary Indians who have been left unable to withdraw their savings,” he added.

Why action on Paytm Payments Bank?

In 2022, the RBI directed Paytm Payments Bank to halt customer additions due to non-compliance issues. Following an audit, persistent non-compliance and supervisory concerns were identified.

The RBI, under legal provisions for depositor protection, has now instructed the bank to cease accepting new deposits without specifying a review timeline for the imposed restrictions.

What did Paytm say?

Paytm said it will take steps immediately to comply with the RBI’s directions. Due to the order, it expects a worst-case impact of ₹300 to 500 crore to its annual earnings before interest, tax, depreciation and amortisation (EBITDA).