The Reserve Bank of India's (RBI) clampdown on Paytm Payments Bank's business was a result of persistent non-compliance of the regulator's norms, a central bank official said on Thursday.
The regulatory actions were taken after giving the firm sufficient time to comply, RBI deputy governor Swaminathan J said at a press conference following the central bank's monetary policy review.
The RBI last week ordered Paytm Payments Bank to stop accepting new deposits in its accounts or popular digital wallets beginning March, citing supervisory concerns and non-compliance with rules.
Sufficient time is given to non-compliant entities but action is taken when bilateral talks don't yield action, RBI governor Shaktikanta Das said at the same briefing.
"When such constructive engagement does not work or when the regulated entity doesn't take effective action, we go for imposing supervisory or business restrictions," Das said.
In the context of the Paytm order, Das added that the central bank will issue clarifications as needed next week.
"Suitable steps" will be taken to ensure that customer inconvenience, if any, is minimised, Swaminathan said.
He did not specify what steps the central bank plans to take.
Paytm shares extended their slide to 10% on the National Stock Exchange after the deputy governer's comments. The shares were last trading down about 9%.