RBI bars Fino Payments Bank from enroling new customers
An RBI audit revealed that a few Fino Payments Bank accounts had deposits in excess of the stipulated amount in the operational guidelines
New Delhi: Fino Payments Bank, one of India’s first payments banks, has been barred by the Reserve Bank of India from adding new customers since the end of May.
The central bank in its auditing of payments banks in May found Fino Payments non-compliant with the operational guidelines laid down by it.
“It was observed that a few Fino Payments Bank accounts had deposits in excess of the stipulated amount,” said the payments bank in a statement on Wednesday.
According to RBI’s operating guidelines for payments banks, a customer can make deposits of up to ₹1 lakh per account in a year. Such banks cannot accept deposits beyond this limit.
The payments bank was asked to immediately stop enrolling new customers until it takes corrective actions.
“In view of this development, RBI advised us not to open new accounts till the upgraded processes are in place. We are in the process of making the necessary product and technology changes,” said Fino Payments. It didn’t say whether the RBI has set any deadline for the upgradation.
The payments bank said, however, that it continues to operate accounts of all its existing customers.
“We are also permitted to open minimal KYC wallets. As such, our existing customers continue to do banking transactions be it deposits, withdrawal, money transfer, bill payments and third party offerings without any inconvenience,” it said.
Fino, which was a remittance service provider, received the RBI nod to operate as a bank in March 2017. It started operations in September after its launch in July last year. It claims to have a customer base of close to a million.
Fino Payments isn’t the only one.
The central bank has imposed similar restrictions on Paytm Payments Bank which is also not able to on-bard new customers.
Paytm stopped enrolling new customers on 20 June following an audit by RBI, which made certain observations about the process the company follows in acquiring new customers and its adherence to know-your-customer (KYC) norms, Mint reported on Wednesday.
In January, RBI directed Airtel Payments Bank not to onboard new customers after it was found to be opening accounts without specific or clear consent from the customers. It was until early this month, that the payments bank received requisite approvals RBI and the Unique Identification Authority of India (UIDAI) to start onboarding customers using Aadhaar based e-KYC (know your customer).
“There should be stricter steps from RBI to ensure better compliance. Stopping the enrolment of new customers or penalty is not going to help much as these banks have already on-boarded most of its customers and penalty of a few lakhs does not matter to them,” said the chief executive of a payments company, who did not wish to be named.
Other payments banks that have started operations are India Post Payments Bank Ltd, Aditya Birla Idea Payments Bank and Jio Payments Bank.
Payments bank is a differentiated bank providing a limited range of products, such as acceptance of demand deposits and remittances of funds. These banks cannot issue loans and credit cards.
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