Recorded RBI impact
Monetary penalty
Monetary penalty · Fresh imposition
Published by RBI
26 Jul 2024
Case Brief
The Reserve Bank of India imposed monetary penalties on two Payment System Operators for non-compliance with the Master Direction – Know Your Customer (KYC) Direction, 2016. Manappuram Finance Limited was fined ₹41.50 lakh and Ola Financial Services Pvt. Ltd. was fined ₹33.40 lakh. RBI said the entities were non-compliant with KYC requirements, issued show-cause notices, and after considering their written submissions and oral hearing, found the charges substantiated and deserving of penalty. The release also states that compounding orders were issued separately to Ola Financial Services Pvt. Ltd. and Visa Worldwide Pte. Limited for contraventions related to PPIs and card-not-present authentication rules, including an instance where Visa Worldwide had implemented a payment authentication solution without regulatory clearance.
Why RBI Acted
RBI imposed a monetary penalty on two Payment System Operators for non-compliance with RBI’s KYC directions. Manappuram Finance Limited and Ola Financial Services Pvt. Ltd. were found non-compliant with the directions issued on KYC requirements; notices were issued and, after considering written responses and oral submissions at the personal hearing, RBI concluded the charges were substantiated and warranted penalty. The release also notes related compounding actions involving Ola Financial Services Pvt. Ltd. and Visa Worldwide Pte. Limited for separate contraventions.
Operating Impact
The penalty creates a financial and compliance consequence for the named PSOs but does not itself impose an operating ban or restriction. The entities are expected to strengthen KYC compliance and, in Ola’s case, also address the escrow-account shortfall and the separate compounding matter; the release states the actions do not pronounce on the validity of customer transactions or agreements.
Regulatory Basis
- Section 30 of the Payment and Settlement Systems Act, 2007
- Section 31 of the Payment and Settlement Systems Act, 2007
- Master Direction – Know Your Customer (KYC) Direction, 2016 dated February 25, 2016
Action Facts
- Primary Impact
- Monetary penalty
- Order Date
- 16 Jul 2024
- Effective From
- 16 Jul 2024
- Entities Affected
- 3
- Entity Role
- Primary
- Entity Type
- Payment entity
Related Entities
Entities similar to Manappuram Finance Limited