{"id":142661,"date":"2023-10-13T14:42:14","date_gmt":"2023-10-13T09:12:14","guid":{"rendered":"https:\/\/www.oliveboard.in\/blog\/?p=142661"},"modified":"2023-10-13T14:42:15","modified_gmt":"2023-10-13T09:12:15","slug":"rbi-slaps-%e2%82%b95-4-crore-fine-on-paytm-payments-bank","status":"publish","type":"post","link":"https:\/\/www.oliveboard.in\/blog\/rbi-slaps-%e2%82%b95-4-crore-fine-on-paytm-payments-bank\/","title":{"rendered":"RBI Slaps \u20b95.4 Crore Fine on Paytm Payments Bank"},"content":{"rendered":"\n

Paytm Payments Bank has been penalized by the Reserve Bank of India<\/a> with a fine of \u20b95.39 crore due to non-compliance with various provisions of RBI guidelines, particularly related to Know Your Customer (KYC) and cybersecurity.<\/strong> 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.<\/p>\n\n\n\n

Reasons behind the Fine imposed by RBI<\/h2>\n\n\n\n

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.<\/p>\n\n\n\n

The non-compliance issues<\/h3>\n\n\n\n
  1. KYC Compliance:<\/strong> Paytm Payments Bank failed to comply with certain provisions of the RBI’s ‘Know Your Customer (KYC) Directions, 2016’.<\/li>
  2. Licensing Guidelines:<\/strong> The bank did not meet the RBI’s guidelines for licensing payments banks.<\/li>
  3. Balance Limits:<\/strong> There was a violation related to the ‘Enhancement of maximum balance at the end of the day’.<\/li>
  4. Cybersecurity:<\/strong> Non-compliance with the ‘Cyber security framework in banks’ and the ‘Guidelines on reporting of unusual cyber security incidents’.<\/li>
  5. Mobile Banking Security:<\/strong> Failure to secure mobile banking applications, including those within the UPI ecosystem.<\/li>
  6. Beneficial Ownership Identification:<\/strong> Paytm Payments Bank failed to identify beneficial owners of entities onboarded for payout services.<\/li>
  7. Transaction Monitoring:<\/strong> The bank did not adequately monitor payout transactions and carry out risk profiling of entities using payout services.<\/li>
  8. Balance Ceiling Violation:<\/strong> Non-compliance with the regulatory ceiling of end-of-the-day balance in certain customer advance accounts availing payout services.<\/li>
  9. Device Binding Control:<\/strong> Failure to implement device binding control measures related to ‘SMS delivery receipt check’.<\/li>
  10. V-CIP Infrastructure:<\/strong> The V-CIP (Video Customer Identification Process) infrastructure failed to prevent connections from IP addresses outside India.<\/li><\/ol>\n\n\n\n

    The penalty of \u20b95 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. <\/strong>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.<\/p>\n\n\n\n

    About Paytm Payments Bank<\/h2>\n\n\n\n

    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.<\/p>\n\n\n\n

    Paytm Payments Bank is a digital bank that offers a variety of services<\/h3>\n\n\n\n