RBI Cracks Down on Non-Compliance
The Reserve Bank of India (RBI) has imposed monetary penalties on three payment system operators, namely Visa Worldwide, Ola Financial Services, and Manappuram Finance, for deficiencies in regulatory compliance.
Penalty Amounts Imposed by RBI on 3 Payment System Operators
The Reserve Bank of India (RBI) has imposed monetary penalties on three payment system operators, namely Visa Worldwide, Ola Financial Services, and Manappuram Finance, for non-compliance with certain provisions of the Payment and Settlement Systems Act, 2007.
Penalty Amounts
- Visa Worldwide Pte Limited: Rs 2.4 crore on Visa Worldwide Pte Limited for implementing a payment authentication solution without obtaining the necessary regulatory clearance from the central bank.
- Ola Financial Services: Rs 87.55 lakh (Rs 33.4 lakh for non-compliance with KYC directions and Rs 54.15 lakh for contravention of certain provisions in Prepaid Payment Instruments’ master direction)
- Manappuram Finance Limited: Rs 41.50 lakh on Manappuram Finance Limited for non-compliance with certain provisions of Know Your Customer (KYC) directions.
These penalties were imposed by the RBI for non-compliance with Know Your Customer (KYC) guidelines and other regulatory requirements. The central bank has also issued compounding orders to Ola Financial Services and Visa Worldwide for contravention of certain provisions.
Reasons for Penalty
The RBI observed that Visa Worldwide Pte Limited had implemented a payment authentication solution without regulatory clearance from the RBI. Consequently, a notice was issued to the company, requiring it to provide an explanation as to why a penalty should not be imposed for non-compliance with the directions.
The RBI observed that OFS was non-compliant with the directions issued by RBI on PPIs, specifically with regard to the maintenance of escrow account, reconciliation of accounts, and reporting requirements. A notice was issued to the company, requiring it to show cause as to why a penalty should not be imposed for non-compliance with the directions. After considering their written responses and the oral submissions made during the personal hearing, RBI concluded that the charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.
The RBI observed that Manappuram Finance Limited was non-compliant with the directions issued by RBI on KYC requirements. A notice was issued to the company, requiring it to show cause as to why a penalty should not be imposed for non-compliance with the directions. After considering their written responses and the oral submissions made during the personal hearing, RBI concluded that the charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.
Compounding Orders
Compounding orders were also issued to Ola Financial Services and Visa Worldwide for contravention of certain provisions. The RBI determined that the contravention could be compounded after analyzing the compounding application and oral submissions made during the personal hearing.
The penalties imposed by the RBI serve as a warning to other payment system operators to comply with regulatory requirements and directions. The central bank’s vigilance in ensuring compliance with KYC requirements and other provisions is crucial in maintaining the integrity of the payment system.
RBI’s Vigilance
The RBI’s action on KYC non-compliance highlights the regulator’s vigilance regarding lapses in these procedures. The central bank issued notices to the entities, requesting them to explain why penalties should not be imposed for their non-compliance.
Conclusion
The RBI’s decision to impose penalties on these payment system operators serves as a warning to other operators to comply with regulatory requirements. The central bank’s vigilance in ensuring compliance with KYC requirements and other provisions is crucial in maintaining the integrity of the payment system.
FAQ’s
- Q: Why did the RBI impose penalties on Visa Worldwide, Ola Financial Services, and Manappuram Finance? A: The RBI imposed penalties on these payment system operators for non-compliance with certain provisions of the Payment and Settlement Systems Act, 2007.
- Q: What was the reason behind the penalty imposed on Visa Worldwide? A: Visa Worldwide was penalized for implementing a payment authentication solution without obtaining the necessary regulatory clearance from the RBI.
- Q: What were the reasons behind the penalties on Manappuram Finance and Ola Financial Services? A: Both Manappuram Finance and Ola Financial Services faced fines for non-compliance with Know Your Customer (KYC) regulations.
- Q: How much penalty was imposed on each of the payment system operators? A: The RBI imposed a penalty of Rs 2.4 crore on Visa Worldwide, Rs 41.5 lakh on Manappuram Finance, and Rs 87.55 lakh on Ola Financial Services.
- Q: What is the impact of these penalties on consumers? A: These regulatory actions are aimed at ensuring greater security and transparency within the financial sector, thereby preserving consumer trust.
- Q: What other institutions have faced similar regulatory actions? A: Paytm Payments Bank, Kotak Mahindra Bank, and IIFL Finance have also faced regulatory actions from the RBI for various compliance issues this year.
