The Reserve Bank of India on Tuesday (June 12) said it had fined Ola Financial Services Private Limited Rs 1,67,80,000 for non-compliance with KYC standards. The fine was also imposed because the company violated certain standards set by the bank in relation to prepaid payment instruments or PPI. The RBI notified the decision in a press release the same day, saying that Ola Financial Services had not provided a satisfactory response to its show cause notice sent earlier.
“The Reserve Bank of India (RBI) has imposed a fine 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 Principal Instruction on PPI dated August 27, 2021 (as updated from time to time) and Principal Instruction – Know Your Customer (KYC) Directorate, 2016 dated February 25, 2016 (as updated from time to time),” the RBI said in its press release.
“The sanction was imposed in exercise of the powers conferred on RBI under Section 30 of the Payments and Settlement Systems Act 2007,” the central bank said. “This action is based on deficiencies in regulatory compliance and is not intended to pronounce on the validity of any transaction or agreement entered into by the entity with its customers,” he added. .
Giving the reasons for imposing the sanction on Ola Financial Services, the RBI said that it had previously sent a show cause notice to the company after finding that it was in breach of KYC standards, but Ola could not. provide appropriate response. “It was observed that the entity was not in compliance with the instructions issued by RBI on KYC requirements. As a result, a notice was sent to the entity informing them to justify why a penalty should not be imposed for non-compliance with instructions.
The central bank further added that after reviewing the company’s response, RBI concluded that said “charge of non-compliance with RBI’s instructions was well-founded and warranted the imposition of a monetary penalty.” The central bank, however, did not mention in detail which provisions the company had breached.
Ola Financial Services has released no statement regarding the issue.
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