The Reserve Bank of India on Tuesday, June 12, said it had imposed a fine of Rs 1,67,80,000 on Ola Financial Services Private Limited for non-compliance with KYC norms. The fine was also imposed since the company breached certain norms laid out by the bank in connection with Prepaid Payment Instrument or PPIs. The RBI notified the decision in a press release on the day, saying that Ola Financial Services did not provide satisfactory response to its show cause notice sent earlier.
“The Reserve Bank of India (RBI) has imposed monetary penalty of ₹1,67,80,000/- (Rupees one crore sixty seven lakh eighty thousand only) on Ola Financial Services Private Limited (the entity) for non-compliance with certain provisions of the Master Directions on PPIs dated August 27, 2021 (as updated from time to time) and the Master Direction – Know Your Customer (KYC) Direction, 2016 dated February 25, 2016 (as updated from time to time),” said the RBI in its press release.
“The penalty has been imposed in exercise of powers vested in RBI under Section 30 of the Payment and Settlement Systems Act, 2007,” said the central bank. “This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers,” it further added.
Giving reasons for imposing the penalty on Ola Financial Services, the RBI said, that it had earlier sent a show cause notice to the company upon observing that it was breaching the KYC norms, but Ola could not provide a suitable answer. “It was observed that the entity was non-compliant with the directions issued by RBI on KYC requirements. Accordingly, notice was issued to the entity advising it to show cause as to why penalty should not be imposed for non-compliance with the directions.”
The central bank further added that after considering the company’s response, RBI concluded that the said “charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty.” The central bank however did not mention in detail regarding as to what provisions the company had breached.
Ola Financial Services has not released any statement regarding the issue.