DECEMBER 20249The Fabulous Fintech sector is revamping the Indian finance's terrain by rendering more adaptable and comprehensive amenities to users & edifying the foundation of economyplatform for mobile recharges and bill payments and very soon it extended its service and entered into the realm of debit cards, post-paid mobile payments, and the game-changing e-wallet in 2014. Gradually it attracted major players of economy like Indian Railways, to merge with this platform where.The lockdown of 2022 was bestowed as a boon for this startup when the government declared demonetization which forced the common people to switch to digital payment methods. With the year 2021, Paytm grabbed revenue of 50 million active users, processing over 1 billion transactions monthly.Further he has pushed the startup to become a juncture of entertainment and transportation by introducing bus, train, and flight tickets along with movie and event tickets.Paytm payment bank was established in 2017 with RBI's approval but later it was accused of violating KYC norms of RBI. Though it got several warnings from RBI it did not take any corrective measures and finally it faced a ban to take up new customers.Despite high revenues, it faced mounting losses due to high operational costs and large-scale investments in growth and customer acquisition. On the other hand, its stock performance drastically declined. Paytm's data privacy was breached and several data was leaked for which their parent company one97 communication is solely responsible.RBI has applied fine during October 2023 which is followed by another fine in Feb 2024 on the charges of fraud and money laundering and as the final verdict, RBI completely banned Paytm from carrying out every banking activity.Revenue Secretary Sanjay Malhotra told media, "If there are any fresh charges of money laundering against Paytm by RBI, those will be investigated by the ED as per the law of the land. And restrictive actions have not been taken against Paytm."Company CEO Vijay Sekhar Sharma demolished all the allegations against them and said, "We would like to reiterate that the company and its associate Paytm Payments Bank Limited are not the subject matter of any such investigation. Such media reports are entirely misleading, baseless and malicious, which harm the interests of all our stakeholders."This is a burning example for all the booming fintech startups who were getting inspired from Paytm. The fall of Paytm showed that, overconfidence and arrogant expansion can bring a severe downfall.Lessons the Startups should AcknowledgeFintech is one of the most vulnerable and risky industry where minute care should be taken to flourish till the end. RBI is the apex body of Indian Banking system and concerned about minor to major monitory transactions take place in India. So, the growing fintech startup should make the mind to blindly follow the rules and regulation of RBI without having another thought or substitute.· The booming fintech startups must comply with the KYC norms of RBI in any situation without fail. Huge number of money laundering cases were reported against which is measured in crores, because they did not complete the KYC process.· Each of the customer's needs to have UPI ID along with PAN card. Always check that if one pan card is being used to open several accounts.· Paytm submittted incomplete and false compliance to RBI several times, and as its consequences, the cases of money laundering started growing, data was got leaked.· The fintech startups should get the chance to offer their own mutual fund and insurance products to enhance their source of revenue generation and profitability.Innovative Initiatives by StartupsY Combinator-Backed Fintech startup Fello led by Manish Maryada has launched Fello 2.0 which offers the customer to save new assets like tax saving mutual funds and fixed deposits in addition to digital gold and P2P, which could offer better returns and bigger rewards. It attracts the customer with the concept of save more to earn more.
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