RBI Slaps Paytm Payments Bank With A Penalty of Rs 1 Cr: Here’s Why

The Reserve Bank of India imposed a monetary penalty on Paytm Payments Bank Limited (PPBL) and Western Union Financial Services Inc (WUFSI) on Wednesday for regulatory compliance violations. For non-compliance with certain provisions of RBI's guidelines, PPBL has been penalized with Rs 1 crore, whereas WUFSI has been fined Rs 27,78,750 (Rupees twenty-seven lakh, seventy-eight thousand, seven hundred and fifty only). "On examination of PPBL's application for issue of final Certificate of Authorisation (CoA), it was observed that PPBL had submitted information which did not reflect the factual position. As this was an offence of the nature referred to in Section 26 (2) of the PSS Act, a notice was issued to PPBL. After reviewing the written responses and oral submissions made during the personal hearing, the RBI determined that the aforementioned charge was substantiated and warranted the imposition of a monetary penalty," RBI said in a notification.

Western Union Financial Services Inc (WUFSI), a Money Transfer Service - cross-border in-bound service (customer to customer only) operator, has been fined by the central bank for failing to comply with certain provisions of the Master Direction on Money Transfer Service Scheme (MTSS Directions) dated February 22, 2017. "WUFSI had reported instances of breach of the ceiling of 30 remittances per beneficiary during the calendar years 2019 and 2020, and filed an application for compounding of the violation. RBI determined that the aforementioned non-compliance warranted the imposition of a monetary penalty after analysing the compounding application, and oral submissions made during the personal hearing," RBI added in a statement.

RBI also imposed a monetary penalty of Rs 1 crore on our country's largest lender, State Bank of India (SBI), in an order dated October 18, 2021, for non-compliance with the directions enclosed in the 'Reserve Bank of India (Frauds classification and reporting by commercial banks and select FIs) directions 2016'. "This action 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," RBI claimed.

On the same day, the apex bank had also charged a monetary penalty of Rs 1.95 crore (Rupees One Crore and Ninety-five Lakh only) on Standard Chartered Bank - India for non-compliance with the directions issued by RBI on 'Customer Protection - Limiting Liability of Customers in Unauthorised Electronic Banking Transactions', 'Cyber Security Framework in Banks', 'Credit Card Operations of banks'. According to RBI "this action 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."