- Startup founders, VCs, and others support Paytm CEO Vijay Shekhar Sharma against the RBI's decision.
- The incident coincides with a trend of Indian startups abroad considering a return, with potential implications for the broader fintech ecosystem.
- Paytm's stock price opens at the lower circuit of ₹487.20, reflecting market concerns about regulatory developments.
Shortly after the RBI took action against Paytm Payments Bank, preventing it from offering UPI services or any other banking services to its customers, many startup founders and VCs have come out supporting Paytm CEO Vijay Shekhar Sharma.
This is a rare instance where even bankers and analysts have criticized the RBI and called its decision harsh. The RBI's directive is expected to impact Paytm's revenues from offline merchants, FASTag payments, wallet business, and other services.
Paytm CEO Sharma has expressed his gratitude to the startup community for their support and emphasized the importance of unity in overcoming challenges.
It is important to mention that the RBI has stated that the new restrictions on Paytm Payments Bank are due to "persistent non-compliance and ongoing supervisory concerns".
The RBI's decision to tighten regulations on VSS-led fintech also coincides with a growing trend of Indian startups based abroad considering returning to India. Fintech startups like Groww, Pine Labs, and Razorpay are actively planning their return.
However, the recent RBI-Paytm situation has the potential to make Indian startups abroad reconsider their plans, as industry leaders have repeatedly expressed concerns about burdensome regulatory compliance.
There are growing fears that such moves could hinder India's fintech ambitions. The stock price of Paytm opened at its lower circuit of ₹487.20.
Edited by Shruti Thapa