PIL against Paytm's paid wallet: RBI, the company opposes

New Delhi, September 4 () The Reserve Bank of India told the Delhi High Court on Wednesday that a Public Interest Litigation (PIL) cannot be used as a weapon to challenge financial or economic decisions made by the government or the RBI.

The RBI made the presentation in response to a PIL claiming that the Paytm online payment platform was providing loan services in violation of the law that regulates such activity.

The affidavit was filed with a bank of the President of Supreme Court D N Patel and Judge C Hari Shankar, who has listed the matter for a new hearing on September 18.

The petition filed by Abhijit Mishra, a financial economist, said that the 'postpaid' service of Paytm Payments Bank Ltd was operating against the law and the current guidelines governing such entities.

He argued that RBI guidelines for payment banks, such as Paytm, do not allow credit or loan disbursement activities by those entities.

In its affidavit, RBI said that section 22 of the Banking Regulation Act empowers the RBI to issue bank licenses to a company to conduct banking business in India, subject to certain conditions set forth in this provision.

In a request made in this name by Respondent 2 (Paytm), the RBI has issued a license to conduct banking business in the style of a 'payment bank' subject to certain conditions listed in the license itself. With the operational guidelines issued by the RBI, specify the broad contours within which a payment bank is required to operate, strictly adhering to them, he said.

When seeking the dismissal of the statement, the central bank said that Mishra sought relief against Paytm, but that he made RBI the first part, since he could be aware that a PIL would not lie against a private agency and is indirectly trying to divert to court.

To initiate an action under the relevant provisions of the BR Act, RBI must ensure that Paytm has acted in a manner that is detrimental to the interests of depositors. No action can be initiated solely on the unfounded allegation of the petitioner. Therefore, you should not be granted any relief, RBI said in its affidavit.

Paytm also opposed the petition alleging that the motive was based on incorrect facts and an incorrect understanding of the law.

In his response, he said that the Paytm application is owned by One97 Communications Ltd, which was engaged in the business of providing payment solutions, providing services related to electronic payments and selling digital goods in its mobile application.

He said that Paytm Payments Bank Ltd does not own or operate the Paytm application and simply uses the technology and services of the application platform in accordance with a service agreement with One97 that owns the application.

Regarding Paytm's postpaid service, he said the service is provided by Clix Finance India, which is an NBFC and is in the business of providing loans/credit.

Paytm Payments Bank Ltd and Clix have an agreement to share the customer's C-KYC identifier only after the customer has given explicit consent, he said.

The affidavit added that Paytm Payments Bank Ltd shares only KYC (customer identity) ID with Clix and not any personal or confidential customer information.

When using Paytm's postpaid service, the amount disbursed is not credited to the client's wallet or bank account, but is reflected in Clix's loan books, as it is a service that Clix provides to its customers. This is explicitly clear that Paytm Payments Bank Ltd is not providing loans/loans to its customers, he said.

The petition, filed through the lawyer Payal Bahl, has affirmed that Paytm Payments Bank Ltd has been lending to clients through its Paytm Post Paid, so it is a clear violation of the guidelines that prohibit loans by the bank of payments.

He has sought instructions for RBI to take appropriate punitive actions against Paytm Payments Bank Limited.

The petition also states that any new product launched by the payment bank needs the prior approval of RBI, but in the case that Paytm has not informed the central bank about its 'postpaid' service.

Paytm 'postpaid' is a line of credit offered by the company to its customers.

As part of this service, customers can recharge mobile phones, book movies and travel tickets and also buy on Paytm and pay the following month at no cost or with interest.

The petition alleges that Paytm's 'post payment' service is sharing personal information, such as Aadhaar and PAN, of customers with third parties.

In addition to seeking punitive actions against the company, the petition also requested instructions from RBI to appoint or delegate one of its senior officers to the company's board to ignore the audit of operations and regulatory compliance.

The statement has also sought an investigation against the directors, managers and officers of Paytm Payments Bank Ltd for alleged negligence and violation of the provision of Article 21 of the Constitution of India, the Banking Regulations Act, the Payments and Settlements Act and other relevant banking laws. . In addition, he has sought instructions to transfer all proceeds of Paytm's 'postpaid' service to the Prime Minister's Assistance Fund for the welfare of the nation. SKV SKV SOM SOM