Spice Money fined ₹2.44 lakh for non-compliance with RBI directives

Our Bureau Mumbai | Updated on September 14, 2021

Company flouted certain provisions of the central bank’s directions relating to issuance and operation of PPIs

Reserve Bank of India (RBI) has imposed monetary penalty of ₹2.44 lakh on Spice Money Ltd for non-compliance with certain provisions of its directions relating to issuance and operation of prepaid payment instruments (PPIs).

PPIs are instruments that facilitate purchase of goods and services, financial services, remittance facilities, etc., against the value stored therein.

The central bank, in a statement, said: “It was observed that the entity (Spice Money) was non-compliant with the directions issued by RBI on maintenance of escrow account balance. Accordingly, notice was issued to the entity advising it to show cause as to why penalty should not be imposed for non-compliance with the directions.”

Also read: Spice Money sets up 1 lakh micro-ATMs in rural India

RBI observed that after considering the entity’s written responses and oral submissions made during the personal hearings, it concluded that the aforesaid charges of non-compliance with its directions were substantiated and warranted imposition of monetary penalty.

Master directions

As per RBI’s master directions on PPIs, a non-bank PPI issuer is required to maintain the outstanding balance in an escrow account with any scheduled commercial bank. An additional escrow account may be maintained with a different scheduled commercial bank at the discretion of the PPI issuer.

A non-bank PPI issuer that is member of Centralised Payment Systems operated by RBI shall maintain a Current Account with RBI. Maintenance of escrow balance should be according to the directions.

“The penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 30 of the Payment and Settlement Systems Act, 2007. This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers,” the statement said.

Published on September 14, 2021

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