RBI Levies Rs 5.39 Crore Fine On Paytm Payments Bank For Regulatory Non-Compliance

On Thursday, the Reserve Bank of India announced the imposition of a fine amounting to Rs 5.39 crore on Paytm Payments Bank Ltd due to their failure to adhere to specific regulations. 

These violations encompassed non-compliance with Know Your Customer (KYC) requirements, as well as breaching provisions associated with 'RBI Guidelines for Licensing of Payments Banks,' 'Cybersecurity framework in banks,' & 'Securing mobile banking applications, including the UPI ecosystem.

A meticulous examination of the bank was carried out from the perspective of KYC/AML (Anti Money Laundering). Furthermore, a thorough system audit was conducted by auditors appointed by the RBI, as outlined in an official statement.

Upon reviewing the audit reports, the RBI determined that Paytm Payments Bank had not correctly identified the beneficial owner concerning the entities that were brought on board to offer payout services.

It has been revealed that the bank did not properly oversee payout transactions and conduct risk assessments for the entities that use payout services. Additionally, the central bank stated that Paytm Payments Bank exceeded the regulatory limit for the end-of-day balance in specific customer advance accounts using payout services.

As a result, the bank was issued a notice, asking it to explain why a penalty should not be imposed for failing to adhere to the regulatory directions.

Upon reviewing the bank's response to the notice and the discussions during a personal hearing, the RBI concluded that the bank had indeed failed to comply with the RBI's directives, warranting the imposition of a monetary penalty.

The RBI emphasized that the penalty is a result of regulatory compliance issues and does not pass judgment on the validity of any transactions or agreements made by the bank with its customers.

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