RBI imposes a penalty Worth 5.39 Crore on Paytm Payments Bank for non-compliance with key regulatory provisions
The Reserve Bank of India (RBI) imposed a penalty of Rs 5.39 Crore on Paytm Payments Bank for non-compliance with key regulatory provisions, including KYC norms and cybersecurity guidelines.
Highlights of RBI’s findings via audit:
An audit by the RBI found that the bank had:
- failed to identify the beneficial owner in respect of entities onboarded by it for providing payout services;
- did not monitor payout transactions and carried out risk profiling of entities availing payout services; and
- failed to comply with several data protection and privacy mandates.
These anomalies by Paytm were sufficient for it to be in breach of the RBI (KYC) Directions, 2016 and the RBI Guidelines for Licensing of Payments Banks read with several analogous regulations.
This fine emphasizes that even in a technologically advanced banking landscape, adherence to regulatory norms is non-negotiable.
Furthermore, this move highlights the need for Bank 4.0 to strike the balance b/w customer convenience and regulatory compliance to build trust with customers while ensuring adherence to KYC norms and other regulations.
“Bank 4.0” is not just about technological innovation and customer-centricity. It also necessitates a strong focus on regulatory compliance, cybersecurity, and risk management to ensure a secure and trustworthy digital banking environment.
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