“RBI Imposes Rs 5.39 Crore Fine on Paytm Payments Bank for Regulatory Non-Compliance”

Paytm Payments Bank has recently incurred a hefty fine of Rs 5.39 crore from the Reserve Bank of India (RBI) due to non-compliance with essential guidelines pertaining to the Know Your Customer (KYC) norms and delayed reporting of cyber security breaches.

The RBI’s investigation, comprising a special scrutiny report and a comprehensive system audit report, exposed several shortcomings in Paytm Payments Bank’s adherence to regulations. Notably, the bank neglected to identify the beneficial owner in cases of entities availing payout services, and also failed to adequately monitor payout transactions or conduct risk profiling of these entities.

Furthermore, the bank was found to have neglected the implementation of necessary device binding control measures, particularly related to the ‘SMS delivery receipt check.’ Additionally, Paytm Payments Bank’s Virtual Customer Identification Process (V-CIP) infrastructure proved ineffective in preventing connections from IP addresses outside India.

It’s essential to note that the RBI’s actions are rooted in the identified deficiencies in regulatory compliance and do not signify any judgement on the legitimacy of the bank’s transactions or agreements with its customers.