What's the news? The Reserve Bank of India (RBI) on July 12 imposed a monetary penalty of ₹1,67,80,000 on Ola Financial Services, the financial arm of ride-hailing firm Ola, for non-compliance with Prepaid Payment Instrument (PPI) and Know Your Customer (KYC) guidelines. "It was observed that the entity was non-compliant with the directions issued by RBI on KYC requirements. Accordingly, notice was issued to the entity advising it to show cause as to why penalty should not be imposed for non-compliance with the directions. After considering the entity’s response, RBI concluded that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty." — RBI press release MediaNama has reached out to Ola for a statement and will update this post once we get a response. Why does this matter? Last month, the central bank issued a circular to all non-bank PPIs barring them from loading credit lines onto their products. This circular rattled India's fintech ecosystem since many start-ups like Slice, LazyPay, PhonePe, and Paytm issue short-term loans to customers to refill their prepaid cards or wallets and earn from interest charged on these credit lines. Now, RBI has gone after Ola, indicating its continued scrutiny of PPIs. What financial services does Ola provide? Ola Financial Services, formerly ZipCash Card Services, runs a Prepaid Payment Instrument known as Ola Money Wallet. The company was granted a license for the same in 2009 with validity up to 2023. Ola also provides a credit line to customers through Ola Money Postpaid and issues co-branded credit…
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