Home Economy RBI slaps Rs 1 crore penalty on Paytm Payments Bank

RBI slaps Rs 1 crore penalty on Paytm Payments Bank

The RBI penalised e-commerce giant Paytm under the provisions of Section 47A (1) (c), 46(4)(i) and 51(1) of the Banking Regulation Act, 1949

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RBI slaps Rs 1 crore penalty on Paytm Payments Bank, here’s why

The Reserve Bank of India (RBI) announced today that it had slapped a penalty of Rs 1 crore on Paytm Payments Bank Limited (PPBL) for an offence committed of the nature referred to in Section 26 (2) of Payment and Settlement Systems Act, 2007 (PSS Act).

“The Reserve Bank of India (RBI) had, by an order dated 1 October 2021, imposed a monetary penalty of Rs1 crore (Rupees one crore only) on Paytm Payments Bank Limited (PPBL), for an offence committed of the nature referred to in Section 26 (2) of Payment and Settlement Systems Act, 2007 (PSS Act),” the RBI said in its order.

RBI said that on examination of PPBL’s application for issue of final Certificate of Authorisation (CoA), it was observed that PPBL had submitted information that 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,” the RBI added in its notification.

Besides Paytm Payments Bank, the RBI has also penalised Western Union Financial Services Inc (WUFSI) for non-compliance with certain provisions “of the directions contained in the Master Direction on Money Transfer Service Scheme (MTSS Directions) dated 22 February 2020.” Western Union will have to pay Rs 27.78 lakh to RBI as the penalty.

Earlier this week, RBI imposed a monetary penalty of Rs 1 crore on India’s largest public lender State Bank of India (SBI) for non-compliance with the directions contained in “RBI (Frauds classification and reporting by commercial banks and select FIs directions 2016”.

As per the central bank, the action was 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.

The penalty was imposed in the exercise of powers vested in RBI under the provisions of Section 47A (1) (c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.

The RBI scrutinised a customer account maintained with the bank. The examination of the scrutiny report and all related correspondence pertaining to the same, revealed, among other things, non-compliance with the directions above — to the extent of delay in reporting of fraud in the said account to the central bank.

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