India's central bank has asked Paytm - the company that revolutionised digital payments in the country - to stop all services offered by its banking division, also known as the wallet service, due to "persistent non-compliance" of its rules. The division supports Swift payments through the Paytm app, which has more than 330 million users.
The app can continue to facilitate quick payments between non-Paytm bank accounts as an intermediary but it can't accept direct deposits.
This would severely impact the company's wallet business. Paytm wallet is almost like a bank account in which people can receive deposits, keep money and make payments - all done by scanning a QR code or using mobile phone numbers as their identity.
People can also transfer money from their wallets to their accounts in other banks and vice-versa.
Not surprisingly, the regulatory crackdown has come as a blow to thousands of small business owners who relied on the app for making quick and easy transactions.
"The RBI action is always proportionate to the gravity of the violation and is in interest of systemic stability and protection of consumer interest. Action is taken when regulated entities do not take effective steps," Mr Das said.
A Paytm spokesperson told the BBC that the firm was taking the RBI directive "very seriously".
"We respect the RBI's decision and are working diligently to address the concerns raised," the spokesperson added.
