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In a letter to Indian Prime Minister Modi and Finance Minister Sitharaman, founders of several prominent startups have expressed concern about recent sanctions against Paytm Payments Bank (PPB) and called for a more collaborative approach between the government and the fintech industry, according to Moneycontrol.

Signatories on the letter include names such as Murugavel Janakiraman of Bharat Matrimony, Deepak Shenoy of CapitalMind, Ritesh Malik of Innov8, Vishal Gondal of GOQii, Yashish Dahiya of PB Fintech and Rajesh Magow of MakeMyTrip.

Queries sent to signatories of the letter as well as Paytm remained unanswered at the time of writing this article.

Last week, the Reserve Bank of India asked PPB to cease most operations, including accepting deposits, conducting credit transactions, and processing top-ups for customer accounts, wallets, and cards used for road tolls, effective February 29.

The founders have reportedly advocated for a review of these directions, urging the RBI to assess the proportionality of the restrictions and their broader impact. Additionally, they have requested a reasonable timeframe for Paytm to address any identified shortcomings and demonstrate compliance.

They have written that overly strict regulations aimed at established innovators like Paytm create an atmosphere of inconsistency and unpredictability, which could discourage potential investors and new entrants from participating in the Indian market.

Depending on the nature of the resolution, Paytm expects RBI’s action to have a worst-case impact of Rs 300-500 crore on its annual EBITDA going forward, Paytm said last week in a regulatory filing.

The company is reportedly in advanced talks with multiple players to sell its wallet business. Jio Financial Services and HDFC Bank were frontrunners for the deal, according to a report by Hindu Business Line.

In response to specific queries sent by YourStory, a spokesperson for Paytm Payments Bank Limited said, “We do not comment on any market speculation. We completely abide by the direction of the regulator, and the team’s effort is to ensure a smooth customer experience with the products offered by PPBL.”