RBI imposes penalty of more than Rs. 1 crore on Ola Financial Services Private Ltd. for non-compliance with Master Direction on Prepaid Payment Instruments, 2021 and Know Your Customer, 2016

On 12-07-2022, the Reserve Bank of India (‘RBI’) imposed a penalty of Rs 1 crore and 67.80 lakh on Ola Financial Services Private Ltd (‘Ola’) for not complying with certain provisions of Master Direction on Prepaid Payment Instruments (‘PPI’) dated 27-08-2021 and Master Direction Know Your Customer (‘KYC’) Direction dated 25-02-2016.

Key Points:

1. Ola was non-compliant with KYC directions issued by RBI to which a show cause was issued as to why penalty should not be imposed.
2. On the basis of Ola’s response, RBI concluded that there is non-compliance and warranted imposition of monetary penalty.
3. The penalty is based on deficiencies in regulatory compliance and the intention is not to pronounce validity of any transaction or agreement entered into by the entity with its customers.
4. The penalty has been imposed in exercise of powers vested in RBI under Section 30 of the Payment and Settlement Systems Act, 2007 that should be paid within a period of 30 days from the date of issue.