Ashneer Grover, the former founder of BharatPe, has voiced criticism against the Reserve Bank of India (RBI), characterizing its recent actions against Paytm Payments Bank (PPBL) as “punitive” and suggesting an “overreach” on the part of the regulator. In an interview with MirrorNow, Grover expressed his concerns, stating that the regulatory stance sends a message that traditional banks are deemed “systemically important,” while fintechs are not accorded the same recognition.
Grover said, “Seems to be a $20 billion glass ceiling and the moment you hit it it seems the only way to go is down. Structurally we in India are not ready for big start-ups. Over the last 10 to 12 years startups in India have emerged organically, and people in the government are eager to click pictures with founders but in terms of legislation there has been no move.”
“We have 111 unicorns but none of them is considered systemically important for the economy, but these startups have driven the 6-7.5 percent GDP growth rate that we celebrate. They have brought in maximum FDI in India and created a maximum number of jobs, but see zero legislative support and as they become big you see these public problems,” he added.
The central bank’s directive, which came into effect after February 29, barred PPBL from accepting new deposits or allowing customers to top up their wallets and accounts. This move, according to the RBI, was due to significant irregularities in the bank’s Know Your Customer (KYC) processes.
The fintech pioneer didn’t mince words when he described Paytm as the “father of all fintechs in India,” a cornerstone that laid the foundation for numerous other ventures, including his own BharatPe. He credited Paytm with popularizing QR code payments and facilitating a seamless flow of money across the nation, benefiting both consumers and merchants alike.
Grover’s criticism of the RBI was scathing. He saw the regulator’s action as an “overreach,” a punitive measure that seemed to convey a message: traditional banks are vital, but fintechs are dispensable. He argued that this perspective was rooted in the mindset of the “60-year-olds at the helm” of the RBI, who lacked trust in the younger generation of entrepreneurs, particularly those seen as unconventional or ‘mavericks.’
He pointed out the irony in how startups have driven India’s celebrated GDP growth rate, brought in maximum Foreign Direct Investment (FDI), and created a plethora of jobs, yet they received “zero legislative support.” Grover highlighted a systemic issue, a glass ceiling that startups hit upon reaching a valuation of $20 billion, beyond which they seemingly had nowhere to go but down.
“They (Paytm) introduced and built the behaviours of scanning a QR code to help money flow in India. The ecosystem was built after Google Pay, PhonePe came on the consumer side and BharatPe and Pine Labs came on the merchant side. So for the start-up community, this is sad,” he said.
Grover further argued that this decision reflects a lack of trust in younger individuals, particularly those around 40 years old, who are often considered mavericks in the financial technology sector.
He also pointed out what he sees as regulatory scepticism within the Reserve Bank of India (RBI). Grover attributes this scepticism to the traditional beliefs held by decision-makers in their 60s at the helm of the RBI.
He suggested that there may be a lack of full trust in individuals from a computer or programming background to effectively manage and operate complex systems.
“In the RBI, individuals responsible for making decisions and handling calls are typically around 60 years old. They have experience managing a system of banks. However, there seems to be a lack of trust in a 40-year-old individual, especially if they are considered a Maverick, to run a core system,” he said.
“This lack of faith is observed among those in power and involved in making regulations in India. Specifically, there is scepticism towards a 40-year-old with a background in the computer or programming domain when it comes to running any system. This sentiment appears to be a manifestation of a broader perspective within the institution,” he added.
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