Notwithstanding the UPI’s success story that has earned commendation in India and overseas with quantity of transactions surging at a frantic tempo, the unanticipated crackdown on Paytm Payments Bank has caught everybody unexpectedly.

For the uninitiated, RBI barred Paytm Payments Bank from accepting any buyer deposits after Feb 29 citing non-compliance. The deadline was later prolonged to March 15.

Meanwhile, UPI as a mode of cost is catching up in an enormous approach with clients and retailers alike. The whole quantity of UPI transactions stood at ₹18.41 lakh crore in January 2024, which was 41 p.c greater than the corresponding determine one yr in the past.

Merely a blip?

We spoke to quite a few fintech business stakeholders to get a way of what they understand can be the result of the present set of circumstances revolving round Paytm Payments Bank.

Most of them imagine that it’s a setback, albeit short-term, and doesn’t encapsulate the goings-on within the fintech sector.

They additionally argue that the UPI’s success story continues to be not ripe and it has a number of extra milestones to realize. One such milestone is the UPI credit line getting activated by banks.

Ashwin Bhambri, Founder, Phone par mortgage, says “The UPI rails have world scalability and its success in India as an alternative choice to MasterCard & VISA may be replicated in lots of different international locations.”

ALSO READ: RBI allows pre-sanctioned credit lines through UPI

As digital funds proceed to evolve, many extra monetary devices shall be rolled out, thus increasing the UPI’s footprint in measurement in addition to within the quantity.

“The current disaster in a big funds financial institution is just a brief setback relatively than a mirrored image of the general well being of fintech firms. Although it might have momentarily harm investor belief, notably amidst heightened regulatory scrutiny, it underscores the rising significance of adhering to governance and compliance norms inside the sector,” says Gaurav Jalan, Founder & CEO, mPokket.

“The current disaster in a outstanding funds financial institution has definitely caught market consideration. At this juncture, it is untimely to completely grasp the long-term implications of this occasion. However, it’s anticipated that funding within the fintech sector will persist, notably inside enterprise-focused fintech firms,” says Sameer Singh Jaini, CEO and Founder, The Digital Fifth.

“This may need a brief influence on investor sentiment however on a greater perceive of the RBIs standpoint it’s a mere blip that is agnostic to fintech innovation & investments,” says Ashwin Bambri.

QR codes to proceed

What has, in actual fact, has stored the stakeholders’ confidence intact is that the paytm pockets customers will proceed to have a standard digital cost expertise even after the March 15 deadline.

This can be made attainable when the transactions made on Paytm pockets are backed by different financial institution(s) as an alternative of Paytm Payments Bank. In order to maintain Paytm QR codes working, One97 Communication is predicted to open settlement accounts with a number of banks,

Additionally, Paytm is prone to get the ‘third party application provider (TPAP)’ licence, on the strains of Google Pay and PhonePe, which suggests paytm pockets and QR codes would proceed to work as soon as linked to different financial institution(s), and subsequently, it might not must have its cost financial institution backing its pockets service.

Paytm-related nervousness?

In an obvious try and allay the issues of stakeholders, Finance Minister Nirmala Sitharaman on Monday held a meeting with top executives from main fintech corporations comparable to Amazon Pay, Zerodha, Cred, LendingKart.

“During the assembly, no Paytm-related nervousness or issues had been proven by startup founders and different fintech entities current through the assembly,” mentioned one participant on the situation of anonymity.

Additionally, Sitharaman has requested the Reserve Bank of India (RBI) to carry month-to-month conferences with fintech firms with the intention to tackle regulatory issues.