In response to the recent directive from the Reserve Bank of India (RBI) instructing Paytm's banking affiliate to wind down various operations, Paytm has announced the formation of an advisory committee focused on compliance and regulatory matters.
The committee will be led by M. Damodaran, the former chairman of India's markets regulator, and is poised to collaborate closely with the company's board, as stated by Paytm.
Last week, the RBI issued an order to Paytm affiliate Paytm Payments Bank, mandating the cessation of a significant portion of its business operations, including deposits, credit products, and its widely-used digital wallets, effective by February 29.
The directive was rooted in concerns of "persistent non-compliance" observed by the central bank.
As a regulated entity, Paytm Payments Bank handles user deposits, facilitating transactions on the Paytm app.
The regulatory clampdown has prompted Paytm to take proactive measures, including the establishment of an advisory committee dedicated to navigating compliance and regulatory challenges.
To spearhead this initiative, Paytm has enlisted M. Damodaran, a seasoned figure with prior experience as the chairman of India's markets regulator. The advisory committee's mandate will involve addressing regulatory intricacies and ensuring alignment with stipulated compliance standards.
Amidst the regulatory scrutiny, Paytm has also faced allegations related to violations of foreign exchange rules, an issue currently under investigation by India's anti-fraud agency. In response, Paytm has vehemently refuted these claims, dismissing them as "unfounded and factually incorrect."
Competing in the dynamic digital payments landscape against rivals like Walmart's PhonePe and Google, Paytm has become deeply ingrained in the daily lives of users, facilitating transactions ranging from purchasing groceries to household items.
Since the RBI's intervention on January 31, Paytm's stock has witnessed a substantial decline, losing 45% of its value. This downturn has resulted in a depletion of $2.6 billion in shareholders' wealth, underscoring the significant impact of regulatory actions on the company's market standing.