RBI Levies Penalties On 3 Payment System Operators For Non-Compliance With KYC Guidelines

The central bank imposed a monetary fine on Manappuram Finance, Visa Worldwide, and Ola Financial Services stating that they failed to adhere to the banking regulator’s guidelines

The Reserve Bank of India (RBI) on Friday announced a penalty for three payment system operators citing non-compliance with the regulator’s norms. The central bank imposed a monetary fine on Manappuram Finance, Visa Worldwide, and Ola Financial Services stating that they failed to adhere to the banking regulator’s guidelines. 

The RBI levied a penalty of Rs 41.5 lakh on Manappuram Finance, while Ola Financial Services received a penalty of Rs 33.4 lakh from the regulator. The central bank said that these penalties were being imposed as the entities failed to comply with certain directions of the Know Your Customer (KYC) guidelines, reported Business Standard.

Notably, the banking regulator has been wary about any lapses in KYC compliances and this action comes as result of failure to adhere to these norms. 

As such, the RBI issued a compounding order on Ola Financial Services and stated that it contravened some provisions in Prepaid Payment Instruments’ (PPIs) master direction. For these violations, the bank levied a fine of Rs 54.15 lakh on the firm, making the overall fine come up to Rs 87.55 lakh for Ola Financial Services.

“Further, Ola Financial Services Pvt. Ltd. had also reported instances of shortfall in the balance in its escrow account and filed an application for compounding of the violation,” the central bank noted.

The bank also imposed a penalty of Rs 2.40 crore on Visa Worldwide after it found the entity put in place a payment authentication solution without receiving the appropriate clearance from the regulators.

“The above actions have been taken in exercise of powers vested in RBI under the provisions of Section 30 and Section 31 of the Payment and Settlement Systems Act, 2007 and are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers,” the central bank stated.

Issuing a reply to the central bank’s order, Visa said, “We duly acknowledge the RBI order and remain committed to following RBI guidelines and regulations to continue providing safe and secure payment solutions in India.”