As many as 12 startup founders, reacting to the strict measures taken by the Reserve Bank of India (RBI) against Paytm Payments Bank (PPBL), have written to the prime minister Narendra Modi, finance minister Nirmala Sitharaman, and Reserve Bank of India (RBI) to review the decision of RBI.

The letter requests a reconsideration of RBI’s directive and to hold a discussion with the fintech industry, according to industry sources.

The letter also requests to give sufficient time to PBBL to identify the defects and rectify them.

Restrictive regulations will not only hamper the functioning of financial inclusion in the country but also slow down the pace of economic growth and make it difficult to be globally competitive, stated the letter.

The startups presented a concern that the action taken against PBBL will prompt global investors to consider investing in Indian startups, especially fintech companies, contradictory to the government’s several initiatives to attract foreign funds in the country.

Meanwhile, PBBL CEO Vijay Shekhar Sharma met senior Reserve Bank officials on Feb 5, informed sources. Apart from the removal of the ban on receiving deposits, the firm also asked to extend the Feb 29 deadline given by the RBI.

In an order issued by the RBI last week, it asked PBBL to stop accepting new deposits against investments and its digital wallets effective  from Feb 29.

The action was taken after a comprehensive system audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in PBBL, warranting further supervisory action, the RBI said in a statement on Jan 31.

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