RBI Imposes INR 5.39 Crore Penalty on Paytm Payments Bank for Violations

RBI Imposes INR 5.39 Crore Penalty on Paytm Payments Bank for Violations

VoM News Desk | October 12, 2023 | 11:03 PM IST | Breaking News | Follow on Google News

RBI Imposes INR 5.39 Crore Penalty on Paytm Payments Bank for Violations

RBI Imposes INR 5.39 Crore Penalty on Paytm Payments Bank for Violations

The Reserve Bank of India (RBI) has taken a stern stance against Paytm Payments Bank Limited, imposing a substantial monetary penalty for various violations. The central bank fined Paytm Payments Bank a total of INR 5.39 crore due to transgressions related to Know Your Customer (KYC) requirements and other regulatory norms.

RBI’s stringent action against Paytm Payments Bank reflects the significance of adhering to financial regulations, especially in the digital banking sector. The violations cited by the RBI encompass not only KYC norms but also certain provisions outlined in the ‘RBI Guidelines for Licensing of Payments Banks,’ ‘Guidelines on reporting of unusual cyber security incidents,’ and ‘Securing mobile banking applications including UPI ecosystem.’

Neglected KYC Compliance and Risk Profiling

One of the key findings in RBI’s investigation was Paytm Payments Bank’s lax approach towards monitoring payout transactions and conducting risk profiling of entities availing payout services. KYC requirements are pivotal for any financial institution, and the failure to monitor payout transactions and risk profiling can lead to regulatory non-compliance and potential risks.

Beneficial Owners Not Identified

Additionally, Paytm Payments Bank was found to have neglected the crucial task of identifying beneficial owners concerning entities onboarded by the bank to provide payout services. Recognizing beneficial owners is a critical aspect of financial compliance, as it helps ensure transparency and accountability

VoM News Desk

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