In a recent event, the Reserve Bank of India (RBI) has fined Paytm Payments Bank Limited ₹5.39 Crore for failing to comply with several regulatory provisions. This penalty has been imposed in accordance with the authorities granted to RBI under the Banking Regulation Act, 1949.
The penalty is specifically linked to the bank’s non-compliance with provisions outlined in the ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016,’ ‘RBI Guidelines for Licensing of Payments Banks,’ ‘Enhancement of maximum balance at end of the day,’ ‘Cyber security framework in banks,’ ‘Guidelines on reporting of unusual cyber security incidents,’ and ‘Securing mobile banking applications including UPI ecosystem.’Paytm banks failed keep an eye on customers’ identities which prevents money laundering.In addition to this,bank didn’t properly figure out who the real owners were for certain customers getting paid, didn’t keep an eye on these payments, broke the rules on how much money certain customer accounts could have at the end of the day.They reported cybersecurity problems also late.Following the scrutiny,RBI issued a notice to Paytm Payments Bank advising it to provide reasons why a penalty should not be imposed for the observed non-compliance. After considering the bank’s response and oral submissions during a personal hearing, RBI concluded that the charges of non-compliance were substantiated, justifying the imposition of the monetary penalty.The penalty serves as a regulatory response to identified shortcomings and aims to encourage corrective measures by the bank to align with regulatory expectations.
