RBI Slaps ₹5.4 Crore Fine on Paytm Payments Bank

Paytm Payments Bank has been penalized by the Reserve Bank of India with a fine of ₹5.39 crore due to non-compliance with various provisions of RBI guidelines, particularly related to Know Your Customer (KYC) and cybersecurity. One of the notable areas of non-compliance was the failure to report a cybersecurity incident promptly. This penalty underscores the importance of adhering to regulatory guidelines, especially in the areas of customer data security and compliance.

Reasons behind the Fine imposed by RBI

Paytm Payments Bank has been penalized by the Reserve Bank of India (RBI) for non-compliance with various regulatory provisions. The RBI cited several deficiencies in regulatory compliance and the penalty was based on an analysis of these issues, including a special scrutiny report and a comprehensive system audit report.

The non-compliance issues

  1. KYC Compliance: Paytm Payments Bank failed to comply with certain provisions of the RBI’s ‘Know Your Customer (KYC) Directions, 2016’.
  2. Licensing Guidelines: The bank did not meet the RBI’s guidelines for licensing payments banks.
  3. Balance Limits: There was a violation related to the ‘Enhancement of maximum balance at the end of the day’.
  4. Cybersecurity: Non-compliance with the ‘Cyber security framework in banks’ and the ‘Guidelines on reporting of unusual cyber security incidents’.
  5. Mobile Banking Security: Failure to secure mobile banking applications, including those within the UPI ecosystem.
  6. Beneficial Ownership Identification: Paytm Payments Bank failed to identify beneficial owners of entities onboarded for payout services.
  7. Transaction Monitoring: The bank did not adequately monitor payout transactions and carry out risk profiling of entities using payout services.
  8. Balance Ceiling Violation: Non-compliance with the regulatory ceiling of end-of-the-day balance in certain customer advance accounts availing payout services.
  9. Device Binding Control: Failure to implement device binding control measures related to ‘SMS delivery receipt check’.
  10. V-CIP Infrastructure: The V-CIP (Video Customer Identification Process) infrastructure failed to prevent connections from IP addresses outside India.

The penalty of ₹5 crore was imposed by the RBI after considering Paytm Payments Bank’s response to a notice from the central bank, which had initially asked why a penalty should not be imposed for non-compliance with regulatory directions. This penalty comes after the RBI had previously restricted the bank from taking on new customers and ordered a comprehensive audit of its IT systems.

About Paytm Payments Bank

Paytm Payments Bank (PPBL) is an Indian payments bank, founded in 2017 and headquartered in Noida. It is a part of the mobile payment company Paytm. In the same year, it received the license to run a payments bank from the Reserve Bank of India and was launched in November 2017.

Paytm Payments Bank is a digital bank that offers a variety of services

  • Savings accounts
  • Current accounts
  • Debit cards
  • Prepaid cards
  • Money Transfer
  • Bill payments
  • Mobile recharges
  • Online payments

PPBL is known for its innovative features and its focus on financial inclusion. For example, PPBL was the first bank in India to offer a zero-balance savings account. PPBL also offers a number of features that make banking easier for customers, such as instant account opening and instant money transfer.


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