Paytm is in legal trouble, and this time it is accused of violating RBI norms.
In the era of internet and mobile, there has been an outburst of mobile wallet apps which allow customers to buy goods and services and make payments without any hassle. It is safe to say that, while these mobile services give easy access to customers and seem to be an upswing in the world of marketing, they come with a handful of drawbacks, one being the lack of faith of the larger public who label such apps as ‘deceitful’ and ‘illegal’.
With the astounding performance, Paytm has made a mark in the mobile wallet industry by reaching a market value of $10-$12 billion, according to Forbes, owing to the investment made by Berkshire Hathaway. It has been witnessed that the company clocked a growth rate of 150% in the past two years, caused by huge transactions made by customers through Paytm Mall and Paytm Wallet.
Despite providing smooth transactions, Paytm has received a major backlash from the public who have tagged it as ‘fraudulent’. This started with an allegation that Paytm has been providing certain credit facilities to customers when it goes against the central bank norms.
According to PTI, economist Abhijit Mishra first filed a petition, through advocate PayalBahl, against the Paytm post-paid wallet services in the High Court, quoting that the transaction services provided by India’s largest mobile payments service provider are in clear violation of the guidelines defined by RBI. The petition says that the firm was provided a payments bank licence by the RBI, under Section 22 of the banking Regulation Act. While it does allow certain payment facilities, it violates the right to provide any kind of credit or loans to the customers, and the expenditure of the same, which is granted by the firm.
Chief Justice Rajendra Menon asked the online firm and RBI to give their stance on this matter. The PIL filed against Paytm states that it extends its loans and credit payment facilities to the customers which are downright illegal and outlawed.
The petition also claims that it invades the privacy of the users and has been allegedly distributing their personal information, violating other norms regulated by the RBI.
While it is evident that the online firm is in great trouble as a result of certain violations, it is still unclear as to how the matter is going to be resolved. The much-awaited decision is withheld, to which the Delhi High Court has asked both the RBI and Paytm to file their standpoint on this issue, which is going to be clarified in the next hearing, to be held on September 3.
Paytm has upped its game by introducing Paytm Mall and Paytm Wallet by letting people buy goods and make easy transactions with just one click, respectively. It lets people accumulate cash up to INR 10,000 per month in their Paytm wallets. And it also lets them credit money into other bank accounts without much work.