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Airtel Payments Bank terminates over 1,000 retailers: Report

Photo showing an Airtel board atop a shop

Update: Bharti Airtel has responded after the Bombay Stock Exchange, where the company is listed, sought a clarification on the news report. In its response to the BSE the company said, “Airtel Payments Bank Limited in the ordinary course of its business appoints various retailers, distributors and when necessary terminates such retailer and distributors for various reasons.”

Accordingly the Payments Bank has from time to time, terminated certain retailers  “for reasons including delinquency, performance and other contractual reasons,” the company added.

The vague response does not make any mention of the issues that led to its e-KYC license getting suspended.

Earlier: Airtel Payments Bank has reportedly terminated relationships with over 1,000 retailers for not following the proper process while signing up customers. The Economic Times reports that this development comes after the telecom carrier conducted an internal investigation to find the lapses that led to its Aadhaar-based e-KYC licence getting suspended.

When reached out, an Airtel spokesperson had declined to comment on the issue to MediaNama.

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The report states that the company has levied a penalty of around 50 times the commission paid on several retailers who violated the guidelines for the first time and removed repeat offenders from the network besides imposing a fine on them.

The telecom major had launched the probe after the Unique Identification Authority of India (UIDAI) in mid-December suspended Airtel and Airtel Payments Bank from conducting Aadhaar-based verification of customers. This was due to complaints that the telecom company had used the Aadhaar-eKYC based SIM verification process to open payments bank accounts of its subscribers without taking their ‘informed consent’. Such accounts were also linked to get subsidies from the government.

UIDAI, while suspending the e-KYC licence, had imposed a fine of Rs 2.5 crore on the payments bank.

Timeline of events

  • In late September 2017, it was reported that Airtel Payments Bank had opened bank accounts without the informed consent of its customers and receives a notice from UIDAI.
  • In November 2017, following up on several consumer complaints regarding non-credit of LPG subsidies the Ministry of Petroleum and Natural Gas said that it learnt that the subsidies had been credited their Airtel Payments Bank accounts instead. A sum of over Rs 47 crore was said to have been transacted into the payments bank as part of LPG subsidies.
  • In December 2017, Airtel deposited an interim penalty of Rs 2.5 crore with the Aadhaar-issuing body UIDAI. The company also assured that it will return the Rs 190 crore that had come into the ‘unsolicited’ payments bank accounts of 31 lakh mobile subscribers.
  • Also in December 2017, following the entire fiasco Airtel Payments Bank CEO Shashi Arora resigned from his position.
  • On January 8, it was reported that the company had terminated relationships with over a 1000 retailers and fined others for not following the proper process while signing up customers.

MediaNama’s take (Nikhil adds)

The Airtel case highlights the difference between consent and informed consent. Consent is about trust being formed between two entities, and that requires an understanding of offers and implications on both sides. Airtel adopted, it is alleged, a checkbox based consent with retailers allegedly misleading citizens about the creation of a payments bank account, while they thought they were merely verifying and linking their Aadhaar number with their mobile number. This malpractice, whether it was with Airtel’s knowledge – and it’s difficult to imagine how it wasn’t given the scale at which it was happening, led to money being diverted to Airtel Payments Bank instead of people’s original bank account. Airtel also cannot feign ignorance about the workings of the NPCI mapper. It would have known that the money is being diverted. The retailers business being canceled is not sufficient. Airtel merely being fined is also not sufficient. The problem is that Airtel is too big a player for the UIDAI to do something substantive against them. If it were a player with 50,000 customers instead of hundreds of millions, what do you think the UIDAI would have done? Canceled the KUA license for eKYC. What would the RBI have done? Canceled the payments bank license.

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