LI Network
Published on: October 13, 2023 at 10:56 IST
The Reserve Bank of India (RBI) has imposed a fine of Rs 5.39 crore on Paytm Payments Bank due to its non-compliance with RBI guidelines, specifically related to know your customer (KYC) norms and the delayed reporting of cyber security breaches.
The RBI’s decision was based on the findings of a special scrutiny report and a comprehensive system audit report, which revealed the following areas of non-compliance by Paytm Payments Bank:
1. Failure to identify the beneficial owner for entities using their services for payouts.
2. Lack of monitoring of payout transactions and risk profiling of entities using payout services.
3. Breaching the regulatory ceiling on the end-of-the-day balance in certain customer advance accounts utilizing payout services.
4. Delayed reporting of a cyber security incident.
5. Failure to implement device binding control measures related to ‘SMS delivery receipt check.’
6. Paytm Bank’s V-CIP infrastructure was ineffective in preventing connections from IP addresses outside of India.
The RBI clarified that the punitive action is based on the bank’s regulatory compliance deficiencies and does not pass judgment on the validity of any transactions or agreements between the bank and its customers.
