RBI Slaps Fines on Ola Financial, Visa, and Manappuram Finance for Regulatory Failures

The Reserve Bank of India (RBI) has imposed fines on several financial institutions for failing to adhere to regulatory standards. Visa Worldwide Pte Limited, Ola Financial Services, and Manappuram Finance Limited have all been penalized for various compliance deficiencies.

Fines Imposed

Visa Worldwide received a substantial fine of ₹2.4 crore. Manappuram Finance was fined ₹41.5 lakh, while Ola Financial Services faced a penalty of ₹87.55 lakh. These penalties were issued in two separate cases related to non-compliance with regulatory guidelines.

KYC Non-Compliance

The fines on Manappuram Finance and Ola Financial Services were primarily due to their failure to comply with Know Your Customer (KYC) directions. The RBI announced these penalties in a statement released on July 16, 2024.

Compounding Orders for Regulatory Violations

Additionally, compounding orders were issued to Ola Financial Services and Visa Worldwide for violations of specific provisions. These included the Master Directions on Prepaid Payment Instruments (PPIs) and rules concerning Card Not Present transactions. The violations involved the lack of additional authentication for payments up to ₹2,000, and other regulatory discrepancies.

RBI’s Powers and Actions

The RBI clarified that these actions were taken under its powers defined in Section 30 and Section 31 of the Payment and Settlement Systems Act, 2007. The penalties are due to regulatory compliance issues and do not reflect the validity of transactions or agreements made by these entities with their customers.

Responses and Hearings

Manappuram Finance and Ola Financial Services were found to be non-compliant with KYC requirements. Both companies were issued notices and asked to explain why they should not face penalties. After reviewing their responses and considering oral submissions during personal hearings, the RBI determined that the charges of non-compliance were valid and warranted monetary penalties.

Ola Financial Services’ Escrow Account Issue

Ola Financial Services also reported a shortfall in its escrow account balance and filed an application to settle this violation. The RBI reviewed the application and oral submissions made during the personal hearing and decided that the violation could be compounded.

Visa Worldwide’s Authentication Solution

For Visa Worldwide, the RBI observed that the company had implemented a payment authentication solution without prior regulatory clearance from the RBI. A notice was issued to Visa Worldwide, asking the company to justify why it should not be fined for this non-compliance.

The RBI’s actions emphasize the importance of adhering to regulatory guidelines and maintaining compliance standards in the financial sector.