On Thursday, the Reserve Bank of India gave Paytm Payments Bank a not-so-friendly surprise – a hefty fine of ₹5.39 crore! This penalty was slapped on them because they didn’t follow some important rules from the RBI. These rules are all about making sure they know their customers well (KYC) and protecting against cyber threats. Paytm Payments Bank missed the mark on these, and it cost them a pretty penny.
RBI pointed out that Paytm didn’t meet some of their rules. One of these was not reporting a cybersecurity issue promptly. This was just one instance where Paytm didn’t stick to RBI’s instructions.
Paytm Payments Bank got fined for not following some rules outlined by the Reserve Bank of India. These rules included guidelines about customer identification, how much money can be kept in accounts, and also rules about cyber security. The RBI mentioned these in an order dated October 10, 2023. Paytm mentioned this in their official stock filing.
The RBI’s recent action against Paytm Payments Bank stemmed from a thorough examination of their operations. They found several areas where the bank fell short in meeting regulatory standards. One major lapse was in identifying the true owners of businesses using their payout services. Additionally, they didn’t adequately oversee payout transactions or assess the risks associated with these entities.
This isn’t the first time the RBI has stepped in. Last year, they put a halt on Paytm’s new customer intake and demanded a comprehensive IT system audit. The bank also didn’t adhere to the prescribed limit on end-of-day balances for certain customer accounts using payout services.
Furthermore, Paytm’s security measures were found lacking. They didn’t properly implement a control measure related to SMS delivery receipts, and their V-CIP infrastructure failed to block connections from non-Indian IP addresses. These issues collectively prompted the RBI’s recent actions.
Before applying the penalty, the RBI took a step to inform Paytm and asked for their explanation on why a penalty should not be enforced due to non-compliance with the provided instructions. The decision to levy a fine of ₹5 crore was made after carefully reviewing Paytm’s response to this notice.
