Paytm Payments Bank faces hefty INR 5.4 crore fine due to KYC negligence


Paytm Payments Bank has been penalised INR 5.4 crore by the RBI owing to its failure to adhere to KYC instructions.

A dedicated RBI investigation into KYC/AML protocols revealed numerous areas where Paytm Payments Bank failed to comply. These areas included the bank’s inability to discern beneficial owners of entities which had been onboarded to deliver payout services.

The bank also showed lapses in monitoring payout transactions, risk profiling, and even exceeded regulatory balance ceilings. Furthermore, they did not report a cybersecurity incident promptly and were remiss in incorporating device binding control measures pertinent to SMS delivery receipts.

Additionally, the RBI’s video-based customer identification process, known as V-CIP, was non-operational. This rendered the bank incapable of identifying any user attempting to log in from outside the country. Subsequent to these discoveries, the RBI served a show-cause notice to Paytm Payments Bank.

After reviewing the bank’s feedback to the notice and taking into account remarks during a face-to-face hearing, the RBI confirmed that the noncompliance charges held true.

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