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The newly conceptualised payment banks in India seems to have hit a rough patch following a notice from the banking regulator to not open any new accounts. Fino and Paytm have been asked to immediately stop onboarding new customers for payments banking service.
According to sources, Fino Payments Bank was served a notice by the RBI to stop adding new customers after the regulator noticed certain anomalies with regard to the deposits of existing account holders. Sources said the bank was seen violating the norms related to the deposit limit and that certain accounts were found to have deposits exceeding ₹1 lakh.
Ceiling on deposits
As per RBI’s operating guideline for payment banks, the aggregate limit for customers should not exceed ₹1 lakh and in case it exceeds, the excess amount should automatically be transferred to any other bank account, provided by the customer while opening an account with the payment banks.
To a query on the same, Fino’s spokesperson said, “It was observed that a few Fino Payments Bank accounts had deposits in excess of this stipulated amount. The RBI directed Fino Payments Bank to put in place appropriate process to address the operating guidelines on deposit limits in customer accounts and advised us not to open new accounts till the upgraded processes are in place.”
The spokesperson added that Fino is working towards complying with the directive and is in the process of making necessary product and technology changes. It is business as usual for the existing customers, the spokesperson added.
Fino is the third such bank to have been cracked down by the RBI over compliance issues. Last year in December, the regulator had suspended the licence of Airtel Payments Bank for opening bank accounts for its telecom users without their consent with simple e-KYC.
Another payment bank, Paytm, has also received letters recently from the RBI to immediately stop onboarding new customers after it is learnt to have violated the process for conducting full-KYC. According to a source, Paytm was creating bank accounts for customers using e-KYC process. However, the RBI mandates a full-KYC with officially valid documents such as Aadhar card, PAN card, driver’s licence or passport.
According to a report in Mint , besides barring from having new customers, the RBI has also asked Paytm to remove its payments bank’s CEO Renu Satti for her inability to lead a banking firm since she is not a banker. Paytm refused to provide any official statement on the issue.
KYC hurdle
Paytm has been struggling to scale up its banking business due to the mandatory KYC requisite that the RBI has imposed on all prepaid payment instruments to carry out any kind of transaction of more than ₹10,000 per month.
As per RBI guidelines, mobile wallets, which have been conforming to a minimum KYC format (verification of mobile number) will have convert to full KYC wallet within 12 months of opening it. All existing wallet users have to convert to the full KYC format by this year end.
Analysts feel that this could be a major impediment for Paytm since it is yet to convert all its 300 million active users as full-KYC customers.
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