RBI's whip came on PhonePe, imposed a huge fine, know what is the whole matter

RBI Fines PhonePe: RBI clarified that on many occasions, the balance in the company's escrow account was less than the amount payable to prepaid payment products (PPIs) and merchants, and this shortfall was not reported to RBI on time.

RBI Imposes Fine On PhonePe: Reserve Bank of India (RBI) has imposed a fine of Rs 21 lakh on fintech company PhonePe. This action has been taken by the central bank for not properly following some norms related to prepaid payment instruments. RBI said that statutory inspection of the company's operations was done during the period from October 2023 to December 2024.

Why was the stick used on PhonePe?

On the basis of inspection and correspondence, a notice was issued to the company and asked to explain the reason. After considering the reply and additional presentation given by Bengaluru best company PhonePe, the central bank found all the allegations absolutely correct and imposed a fine.

RBI clarified that on many occasions the balance in the company's escrow account was less than the amount payable to prepaid payment products (PPIs) and merchants and this shortfall was not reported to RBI on time. However, the fine is based only on the deficiencies in regulatory compliance and will not affect the validity of the company's transactions or agreements with customers.

Violation of rules earlier too

According to the guidelines, all non-bank issuers like PhonePe will have to immediately inform the Department of Payment and Settlement Systems (DPSS) in case of any shortfall in the escrow balance. According to the rules, according to the rules, the balance in the escrow account at the end of the day should not be less than the value of outstanding prepaid payment instruments (PPIs) and payments due to merchants.

It is worth noting that RBI has already imposed a fine on PhonePe. In the year 2019, a fine of Rs 1 crore was imposed for non-compliance of rules related to Foreign Portfolio Investor (FPI) and in 2020, a fine of Rs 1.39 crore was imposed for violation of regulatory rules.