Excerpt from Mint Article, Published on July 29, 2024
The Reserve Bank of India (RBI) has imposed significant fines on payment system operators Visa Worldwide, Ola Financial Services, and Manappuram Finance for deficiencies in regulatory compliance. The central bank levied a penalty of ₹2.4 crore on Visa Worldwide Pte Limited, ₹41.5 lakh on Manappuram Finance Limited, and ₹87.55 lakh on Ola Financial Services.
The monetary penalties on Manappuram Finance and Ola Financial Services were due to non-compliance with certain provisions of the know your customer (KYC) directions, according to an RBI statement issued on July 16, 2024. The RBI also issued compounding orders to Ola Financial Services and Visa Worldwide for contravening specific provisions in the Master Directions on Prepaid Payment Instruments (PPIs) and the regulations for “Card Not Present transactions.”
The RBI clarified that these actions were taken under the powers vested in the central bank by Sections 30 and 31 of the Payment and Settlement Systems Act, 2007. The penalties are based on regulatory compliance deficiencies and do not comment on the validity of any transactions or agreements between the entities and their customers.
Both Manappuram Finance and Ola Financial Services were found non-compliant with RBI’s KYC requirements. Notices were issued to the entities, advising them to show cause why penalties should not be imposed. After reviewing their responses and oral submissions during personal hearings, the RBI concluded that the non-compliance charges were substantiated, warranting monetary penalties.
Ola Financial Services also reported a shortfall in its escrow account balance and filed a compounding application for the violation. After analyzing the application and oral submissions, the RBI determined that the contravention could be compounded.
For Visa Worldwide, the RBI observed that the entity had implemented a payment authentication solution without regulatory clearance. A notice was issued, advising Visa to show cause why a penalty should not be imposed for non-compliance.
These penalties underscore the importance of strict adherence to regulatory guidelines by financial entities to maintain the integrity and security of the financial system.
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