Airtel Payments Bank is seeing red this week after the Reserve Bank of India imposed a Rs 5 Cr penalty on the company for violation of operating guidelines and Know Your Customer (KYC) norms.
After receiving several complaints and media reports asserting that the bank had opened customer accounts without the explicit consent of the customers, the RBI conducted an administrative visit to the bank on November 20-22, 2017. The fine was later imposed after RBI inspected the banks documents related to the opening of accounts.
“The Reserve Bank of India (RBI) has imposed, on March 7, 2018, a monetary penalty of Rs 50 million on Airtel Payments Bank Limited (the bank) for contravening the ?Operating Guidelines for Payments Banks and directions issued by RBI on Know Your Customer (KYC) norms,” the central bank said in a statement.
According to reports, more than 23 lakh customers received as much as Rs 47 crore in their Airtel bank accounts, which they did not know existed.
The regulatory visit report and several other relevant documents revealed breaching of Operating Guidelines for Payments Banks and orders issued by RBI on KYC norms, RBI said.
On first instance, on January 15, RBI issued a show cause notice allowing the bank to explain why they should not be penalized for not respecting the guidelines and directions imposed by the central bank.
“After considering the banks reply and oral submissions made in the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI guidelines/directions were substantiated and warranted imposition of monetary penalty,” RBI said.
The report further stated that the fine is imposed based on shortages in regulatory compliance and is not intended to pronounce upon the authenticity of any transactions or agreement between the bank and its customers.
Shashi Arora, CEO and Managing Director, Airtel Payments Bank previously stepped down from her post on December 22 after the Unique Identification Authority of India (UIDAI) suspended Aadhaar linked e-KYC services on December 16 due to allegations of misuse by the company.
The UIDAI’s provisional order was issued after several customers of the telecom giant complained that the company had opened their bank accounts in Airtel Payments Bank after they used the “Aadhaar linked e-KYC services” without their approval and knowledge.
The “Aadhaar linked e-KYC” service of UIDAI gives any entity a direct, electronic, indisputable proof of identity and address along with the date of birth, gender, mobile number and email address.
Therefore, Telecom giant Bharti Airtel are planning to raise approximately Rs 3,000 Crore as a non-convertible certificate of indebtedness for refinancing debt and meeting spectrum liabilities.
The committee of directors is schedule to meet “on Tuesday, March 13, 2018 to inter-alia consider and… issue listed, unsecured, rated, redeemable, non-convertible debentures on private placement basis aggregating up to Rs 3,000 crore,” the company said in a BSE filing yesterday.
The board will also meet on Monday to discuss about other fund-raising options available to the company.
Airtel Payments Bank begun operating in January 2017.