In a recent development, the Reserve Bank of India (RBI) has taken strict action against Paytm Payments Bank Ltd by slapping a hefty fine of Rs 5.39 crore. This significant penalty is a direct consequence of RBI penalizes Paytm Payments Bank for non-compliance with various regulatory provisions, including Know Your Customer (KYC) norms.
The central bank’s investigation also uncovered violations related to “The RBI Guidelines for Licensing of Payments Banks,” “Cybersecurity Framework in Banks,” and “Securing Mobile Banking Applications, including UPI Ecosystem.” To thoroughly examine these breaches, RBI initiated a special scrutiny from the perspective of KYC/AML (Anti Money Laundering) and conducted a comprehensive system audit through auditors chosen by RBI, as stated in an official press release.
Following an extensive review of these reports, RBI declared that Paytm Payments Bank had failed to identify beneficial owners concerning the entities they onboarded for providing payout services. Additionally, it was revealed that the bank did not adequately monitor payout transactions or conduct risk profiling for entities availing payout services.
Furthermore, the central bank noted that Paytm Payments Bank had exceeded the regulatory ceiling for the end-of-the-day balance in specific customer advance accounts that were availing payout services. In response to these infractions, the bank received a formal notice advising it to explain why a penalty should not be imposed for its non-compliance with the regulatory directives.
After evaluating the bank’s response to the notice and considering the oral submissions made during a personal hearing, RBI concluded that the charges of non-compliance with the aforementioned RBI directives were well-founded, justifying the imposition of a monetary penalty on the bank. It’s important to note that the penalty is primarily based on regulatory compliance deficiencies and does not question the validity of any transactions or agreements between the bank and its customers.
In a separate but related development, the RBI has also imposed a fine of Rs 4 lakh on Annasaheb Magar Sahakari Bank, Pune, for violations of specific provisions.
About Paytm Payments Bank:
One97 Communications Ltd serves as the corporate umbrella for Paytm, an Indian mobile payments and financial services corporation with its headquarters located in Noida. Founded in the year 2000 by Vijay Shekhar Sharma, the company extends its reach to both consumers and merchants in India, providing an array of digital payment and financial services through its various subsidiaries and business ventures.
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