Mumbai, Feb 8 (IANS): Senior RBI officials on Thursday said that barring Paytm Payments Banks from accepting deposits was part of “a supervisory action and the restrictions are proportionate to the gravity of the situation.”

RBI deputy governor Swaminathan J clarified that such actions are preceded by several months of bilateral engagement and regulated entities are provided adequate time to take corrective action in order to protect consumers and ensure the financial stability of the system.

RBI Governor Shaktikanta Das said that it was an issue with a specific institution and there was no worry about the entire system.

"Let me put the record straight on the Paytm issue. There is no worry about the entire system. It is an issue with a specific institution," Das told reporters.

“The regulations are in place. It is not a case of regulatory deficiency. It is an issue of compliance with various parameters. I don't want to specify the details," Das said,

He said that the restrictions that have been imposed are proportionate to the gravity of the situation and a responsible regulator has to take all actions in accordance with the system and in the best interest of customers.

He emphasised that there is no worry about the financial system at the moment. However, individual entities should be mindful because of the long term impact.

Das pointed out that bilateral engagement with the regulated entity is undertaken with a view to getting them to take corrective action. However, if such constructive engagement does not work, or when the regulated entity doesn’t take corrective measures, the regulator needs to step in.

The RBI will continue to support and encourage innovation and technology in the financial system, he added.

Das also said that an FAQ would be issued sometime next week to answer questions on the issue.