The Securities and Exchange Board of India won't allow the "same contamination" in markets as experienced with Paytm, according to its Chairperson, Madhabi Puri Buch.
She said on Tuesday that Paytm's problems were contained within its own banking system due to the absence of a Know-Your-Customer registration agency (KRA) system. “A problem within Paytm stayed with Paytm and didn't affect other banks. But if we allow Paytm into our system without KRA oversight, it could contaminate the entire market.”
Buch stressed the necessity of stringent KYC measures, saying, “How can we allow that? We cannot allow that. Our KRAs will always be in place to ensure that things are validated and to prevent any mischievous player from causing harm.”
As reported previously in an NDTV Profit Exclusive, inadequate KYC procedures, which resulted in transactions totaling crores of rupees, were a major factor behind the Reserve Bank of India's stringent restrictions imposed on Paytm Payments Bank Ltd. on Jan. 31.
In March 2022, the RBI halted Paytm Payments Bank from adding new customers. On Feb. 2, the RBI warned about frauds disguised as KYC updates, urging the public to be cautious of unsolicited calls and messages requesting personal information.
The RBI had accused Paytm Payments Bank of persistent non-compliance and directed it to stop accepting new deposits and top-ups, affecting its core services.
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