Reserve Bank of India, on Wednesday, told Delhi High Court that a Public Interest Litigation (PIL) cant be used as a weapon to challenge financial or ecomic decisions taken by government or RBI. It came as a response to a PIL that was filed against PayTm, alleging that online payments portal was providing lending facilities in violation of law regulating such activity.

PIL said Paytm was violating laws

petition that was filed by Abhijit Mishra, a financial ecomist, claimed that Paytm Payments Bank Ltd's 'postpaid' service was operating contrary to existing law and guidelines regulating such entities. It also stated that RBI's guidelines for payments banks, like Paytm, do t permit credit or loan disbursement activities by such entities.

In affidavit that was filed by RBI before a bench of Chief Justice D N Patel and Justice C Hari Shankar and has been listed for furr hearing on September 18, said that section 22 of Banking Regulation Act empowers RBI to issue banking licence to a company to carry on banking business in India, subject to certain conditions provided in this provision.

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"Upon an application me in this behalf by respondent 2 (Paytm), a licence to carry on banking business in style of a 'payments bank' has been issued by RBI subject to certain conditions enumerated in licence itself. se conditions along with operating guidelines issued by RBI, specify bro contours within which a payments bank is required to operate, strictly hering to same," it said.

While seeking dismissal of plea, central bank said that even though Mishra has sought relief against Paytm but he has me RBI first party as he might be aware that a PIL would t lie against a private body. It also said that he is indirectly attempting to misguide c.

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"For initiating action under relevant provisions of BR Act, RBI has to satisfy that Paytm has acted in such a manner which is detrimental to interests of depositors. action can be initiated solely on baseless allegation of petitioner. Hence, relief should be granted to him," RBI said in its affidavit.

Paytm also opposed petition claiming that plea was based on incorrect facts and misguided understanding of law. In its response, company said that Paytm application is owned by One97 Communications Ltd which is engd in business of providing payment solutions, providing services related to electronic payments and selling of digital goods.

It also said that Paytm Payments Bank Ltd does t own or operate Paytm application and only uses techlogy and platform services of application according to a service agreement with One97 which owns application.

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company gave a befitting reply to PIL

company cleared air around Paytm’s postpaid which is a credit facility available to customers by saying that facility is being provided by Clix Finance India which is an NBFC and is in business of providing loans/ credit facility.

"Paytm Payments Bank Ltd and Clix have an arrangement for sharing of C-KYC Identifier of customer only after explicit consent being provided by customer," it said.

affidavit ded that Paytm Payments Bank Ltd shares only KYC Id (Kw Your Customer identity) with Clix and t any personal or sensitive information of customers.

"On availing Paytm postpaid facility disbursed amount is t credited to customers wallet or bank account but it gets reflected in loan books of Clix as it is a facility being provided by Clix to its customers. This is explicitly clear that Paytm Payments Bank Ltd is t providing any credit facilities/ loans to its customers," it said.

petition, filed through vocate Payal Bahl, also claimed, " Paytm Payments Bank Ltd has been lending to customers through its Paytm Post Paid, reby it is clear violation of guidelines that prohibit lending by payments bank." It has furr asked RBI "to take appropriate punitive actions against Paytm Payments Bank Limited". It has also alleged that Paytm's 'postpaid' service is sharing personal information, like Ahaar and PAN, of customers with third parties.

petition has also claimed that any new product launched by payments bank needs prior approval of RBI, but in this case, central bank was t informed by Paytm about its 'postpaid' service.

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As part of Paytm postpaid facility, customers can recharge mobiles, book movie and travel tickets and also shop on Paytm y can also pay following month at zero cost or with interest.

Apart from seeking punitive action against company, petition has also sought directions to RBI to appoint or depute one of its senior officials to company's board "to overlook audit of operations and regulatory compliance".

plea has also sought an investigation "against directors, manment, and officers of Paytm Payments Bank Ltd for alleged malpractice and violation of provision of Article 21 of Indian Constitution, Banking Regulations Act, Payments and Settlements Act, and or relevant banking acts".

It has furr sought directions to transfer all profits earned from Paytm 'postpaid' service to Prime Minister's Relief Fund for welfare of nation.

(With inputs from PTI)