RBI imposes a monetary penalty on three payment system operators

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The Reserve Bank of India (RBI) on Friday imposed a monetary penalty on payment system operators, namely Manappuram Finance, Ola Financial Services, and Visa Worldwide, for non-compliance with the regulator’s guidelines.

The banking regulator imposed a penalty of Rs 41.5 lakh and Rs 33.4 lakh on Manappuram Finance and Ola Financial Services, respectively, for non-compliance with certain directions of the Know Your Customer (KYC) guidelines.

The RBI’s action on KYC non-compliance comes as the regulator has been cautious about lapses in these procedures.

It issued a compounding order on Ola Financial Services for contravention of certain provisions in Prepaid Payment Instruments' (PPIs) master direction.

For this, it separately imposed a fine of Rs 54.15 lakh on the company, taking the total fine on Ola Financial Services to Rs 87.55 lakh.

“Further, Ola Financial Services Pvt. Ltd. had also reported instances of shortfall in the balance in its escrow account and filed an application for compounding of the violation,” the RBI said in a statement.

Visa Worldwide suffered a penalty of Rs 2.40 crore after the RBI observed that the entity had implemented a payment authentication solution without regulatory clearance.

After analysing the compounding application and oral submissions made during the personal hearing, RBI determined that the aforementioned contravention can be compounded, the banking regulator added.

“The above actions have been taken in exercise of powers vested in RBI under the provisions of Section 30 and Section 31 of the Payment and Settlement Systems Act, 2007 and are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers,” the RBI said in a statement.

“Visa respects and abides by the compliance guidelines, regulations and local laws across the countries we operate in. We duly acknowledge the RBI order and remain committed to following RBI guidelines and regulations to continue providing safe and secure payment solutions in India,” a Visa spokesperson said in a statement.