The Reserve Bank of India (RBI) on Thursday said it has imposed a penalty of Rs 5.39 crore on Paytm Payments Bank Ltd for non-compliance with certain provisions, including Know Your Customer (KYC) norms. The central bank also found non-compliance with certain provisions related to ‘RBI Guidelines for Licensing of Payments Banks’, ‘Cyber security framework in banks’ and ‘Securing mobile banking applications including UPI ecosystem’.
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A special scrutiny from KYC/AML (Anti Money Laundering) perspective of the bank was conducted and a comprehensive system audit of the bank was conducted by auditors identified by RBI, according to an official statement. After examination of the reports, RBI in the statement said it found that Paytm Payments Bank failed to identify beneficial owner in respect of entities onboarded for providing payout services.
It was also revealed that the bank did not monitor payout transactions and carry out risk profiling of entities availing payout services, RBI added. Further, the central bank said Paytm Payments Bank breached the regulatory ceiling of end of the day balance in certain customer advance accounts availing payout services.
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A notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the directions.
“After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank,” the statement said.
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The RBI said the penalty is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Meanwhile, the central bank has also imposed a penalty of Rs 4 lakh on Annasaheb Magar Sahakari Bank, Pune, for contravention with certain provisions.
