Reserve Bank of India fines Paytm Payments Bank, Western union

RBI has imposed a penalty of Rs. 1 crore on the Paytm Payments Bank Limited (PPBL) and Rs. 27.78 lakh on the Western Union Financial Services for non-compliance with certain directions.

Created On: Oct 21, 2021 17:56 IST
RBI imposes fine
RBI imposes fine

The Reserve of Bank (RBI) has imposed a penalty of Rs. 1 crore on the Paytm Payments Bank Limited (PPBL) and Rs. 27.78 lakh on the Western Union Financial Services for non-compliance with certain directions.

According to the official release by the Reserve Bank of India, after reviewing the written responses and the oral submissions made during the personal hearing, the Central Bank determined that the aforementioned charge on PPBL and the Western Union Financial Services was substantiated and warranted the imposition of a monetary penalty.

Monetary penalty on PPBL

As per the official release on October 20, 2021, the Reserve Bank of India said on the examination of the application by PPBL for the issue of final Certificate of Authorisation, it was observed that the bank had submitted information that did not reflect the factual position.

The official release further added that as this was an offence of the nature referred to in Section 26 (2) of the Payments and Settlement Systems Act, 2007, a notice was issued to Paytm Payments Bank Limited.

Thereafter, the Central Bank of India by an order on October 1 imposed a monetary penalty of Rs. 1 crore on Paytm Payments Bank Limited (PPBL).

Why RBI has imposed penalty on Western Union?

The Reserve Bank of India, as regards the Western Union Financial Services, said that the company had reported the instances of breach of the ceiling of 30 remittances per beneficiary during 2019 and 2020, and had filed an application for compounding of the violation.

The Central Bank determined that the non-compliance warranted the imposition of a monetary penalty after analyzing the compounding application and the oral submissions made during the oral hearings.

Will penalties affect validity of transactions with the banks?

The Reserve Bank of India has assured that the announced penalties on the Western Union Financial Services and Paytm Payments Bank Limited are based on regulatory compliance and are not intended to pronounce upon the validity of any transaction or the agreement entered into by the entities with their customers.

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