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Airtel Payments Bank reportedly opened bank accounts without customer consent

Airtel Payments Bank has reportedly opened bank accounts without informed consent from its customers and has received a notice from the UIDAI, reports the Press Trust of India. Airtel’s retailers have allegedly used Aadhaar e-KYC to open bank accounts for customers when they went to stores for verification of their SIMs.

The UIDAI reportedly in its notice asked Airtel Payments Bank take immediate corrective measures and report back to the authority on the same. It added that opening accounts without informed consent is a violation of rules and is punishable with financial penalties.

Meanwhile, Airtel sent a statement to MediaNama that it is compliant with UIDAI and Reserve Bank of India regulations.

“Airtel Payments Bank is fully compliant with RBI & UIDAI guidelines and follows a stringent customer onboarding process. Airtel Payment Bank accounts are opened only after explicit consent from the customer . We will continue to educate retailers and strengthen our process to ensure transparency to customers and compliance with regulation,” the company said.

This month, Airtel Payments Bank claimed that it has 20 million customers while launching its UPI integration. Note that Airtel began its payments bank operations in November 2016 starting with 10,000 outlets in Rajasthan. Subsequently, it became the first payments bank to roll out services nationally.

Airtel Payments Bank reported deposits of Rs 68.33 crore at the end of the financial year ended 31st March 2017, which was its first year of operation, according to its annual report. It’s top 20 depositors accounted for around Rs 20.45 lakh (around 0.3% of total deposits), which is probably a function the Reserve Bank of India limiting deposits in Payments Banks to Rs 1 lakh.

Other telecom operators

My Vodafone app, which allows subscribers to manage their bills, recharges and usage, was forcing customers to create an m-Pesa wallet in a January app update. Before the update, Vodafone users were allowed to use My Vodafone app without any access restrictions. However, the January update, provided no recourse if a customer does not accept the terms and conditions which would create an m-Pesa wallet by default with their phone numbers.

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The move came after several telecom operators including Airtel and Idea started launching or readying their payments bank operations. Vodafone received in-principle approval from the Reserve Bank of India (RBI) to start a payments bank in 2015, but a launch date is yet to be provided. The mandatory m-Pesa linking exercise looks like a frantic effort from Vodafone to add new customers before it launches a payments bank.

Wells Fargo scandal

Note that United States bank Wells Fargo has uncovered a further 1.4 million fake accounts, as indicated by this CNN report. The bank says that now it has found a total of up to 3.5 million potentially fake bank and credit card accounts. The bank was embroiled in a scandal the whole of last year when it was found that the sales representatives were forced to open bank accounts for customers and charge them fees for services they did not want.

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