Last week, the Reserve Bank of India (RBI) imposed monetary penalties on PhonePe and five other payments entities, totaling around ₹5.78 crore. While the central bank fined 5 pre-paid instrument (PPI) players, the Punjab National Bank was fined ₹1 crore for non-compliance with regulatory guidelines with regards to the banks’ ATM network operations.
In its press release, the RBI said “In exercise of powers vested under Section 30 of the Payment and Settlement Systems Act, 2007, the Reserve Bank of India has imposed monetary penalty on the following entities for non-compliance of regulatory guidelines.”
The PPI entities recently penalised include:
- Sodexo VC India Private Limited: ₹2 crore
- PhonePe Pvt Ltd: ₹1.39 crore
- QwikCilver Solutions Private Ltd: ₹1 crore
- Muthoot Vehicle & Asset Finance Ltd: ₹34.55 lakh
- Delhi Metro Rail Corporation Limited: ₹5 lakh
Previous penalty orders on PPI players
- On November 07, 2019: RBI imposed a ₹5 lakh penalty on Oxigen Services Pvt Ltd.
- On July 29, 2019: RBI imposed a ₹11.25 lakh penalty against ZipCash Card Services Pvt. Ltd and Yes Bank Ltd, each, for non-compliance with PPI regulatory guidelines.
- On July 11, 2019: RBI issued a ₹15 lakh penalty on One Mobikwik Systems Pvt Ltd and a ₹10.85 lakh penality on Hip Bar Pvt Ltd.
- On May 3, 2019: RBI penalises 5 PPI players totalling ₹6.1 crore, including Vodafone m-Pesa and PhonePe
The issue of transparency
The RBI routinely issues notices to banks, non-bank lenders, payment companies and other regulated entities, based on the findings of its supervisors and inspectors or complaints the RBI’s Ombudsman receives. However, when the RBI issues a penalty to a bank it is usually accompanied by a short description of what rules were flouted and the specific areas of operations where the RBI found regulatory violations. This description can include the specific clauses of RBI circulars or guidelines that are violated, while some banks have been penalised due to non-compliance with Know-Your-Customer, account opening or fraud reporting norms.
However, the same practice is not followed when it comes to the penalty notices issued to PPI players. In neither of the five penalties issued against the PPI players, did the central bank indicate the reasons for the penalty nor the specific violation of regulatory guidelines it had found.