RBI imposes fine on Visa, Ola Financial, Manappuram for non-compliance of KYC, regulatory norms

The Reserve Bank of India on Friday said it has imposed fines on payment system operators Visa Worldwide, Ola Financial Services and Manappuram Finance for deficiencies in regulatory compliance. The central bank has imposed a penalty of Rs 2.4 crore on Visa Worldwide Pte Limited and Rs 41.5 lakh on Manappuram Finance Limited. Ola Financial Services has been fined for Rs 33.40 lakh and Rs 54.15 lakh for two separate violations. 

Visa Worldwide was fined for non-compliance with directions, and Ola Financial Services was fined Rs 33.40 lakh for not adhering to Know Your Customer (KYC) directions. The second fine (Rs 54.15 lakh) has been imposed due to regulatory compliance deficiencies specified under the Payment and Settlement Systems Act, 2007.

The RBI said monetary penalty on Payment System Operators (PSOs) Manappuram Finance and Ola Financial Services has been imposed for non-compliance with certain provisions of Know Your Customer (KYC) directions.

Compounding orders were also issued to two Ola Financial Services and Visa Worldwide for contravention of certain provisions.

Giving details, the Reserve Bank of India said it was observed that Visa Worldwide Pte Limited had implemented a payment authentication solution without regulatory clearance from the central bank.

A formal notice was issued to Visa Worldwide, requiring an explanation of why a penalty should not be enforced due to failure to comply with provided instructions. Following this, Visa Worldwide submitted a request for compounding of the violation. Upon review of the compounding request and all arguments presented during the hearing, the RBI concluded that the offense is eligible for compounding.

The RBI further indicated that both Manappuram Finance Limited and Ola Financial Services were found to be in breach of the KYC requirements stipulated by the RBI. Notices have also been served in these instances for non-compliance.

Penalties were imposed following a thorough evaluation of their written responses and initial submissions. The central bank further disclosed that Ola Financial Services had identified instances of balance shortfall in its escrow account and submitted a compounding application for the violation. 

Subsequent to reviewing the compounding application and verbal presentations during the personal hearing, the RBI concluded that Ola Financial Services' non-compliance could be compounded. The central bank also clarified that the penalties issued are rooted in regulatory compliance shortcomings and do not serve as judgments on the legality of any transactions or agreements between the entity and its customers.

Reacting to the notice, a Visa spokesperson said: “Visa respects and abides by the compliance guidelines, regulations and local laws across the countries we operate in. We duly acknowledge the RBI order and remain committed to following RBI guidelines and regulations to continue providing safe and secure payment solutions in India.”