Mumbai headquartered Fino Payments Bank has been fined INR 1 crore by the RBI after it continued opening new bank accounts setting aside the directives of Reserve Bank of India. RBI on October 31 this year imposed the monetary penalty on the bank.
RBI has directed payment banks to stop the opening of new accounts until further instructions. The penalty has been imposed in the exercise of powers under provisions of Section 47A(1)(c) and Section 46(1)(i) of the Banking Regulation Act, 1949.
In August this year, RBI halted the account opening functions of Fino Payments Bank as it was flouting the guidelines laid down by the central bank that prohibits account holders to have bank accounts with more than INR 1 lakh in deposits. However, the ban was lifted in October allowing the bank to resume its account opening operations.
The latest fine is levied as Fino continued opening new accounts during the ban period. Fino started its operations in April 2017 and has more than 410 branches and 25,000 banking points all over the country. The payment bank has more than 1 million customers that are likely to grow to 3 million by March next year.
Fino Payment Bank was not the only one to be prohibited by the RBI. In June, Paytm Payments Bank halted its account opening services following an RBI audit. The central bank observed that the process followed by Paytm in acquiring customers and completing KYC was not in line with the guidelines set.
RBI also prohibited Airtel Payments bank from opening new bank accounts in January after the central bank found that new accounts were being opened without the consent of customers. However, RBI allowed Airtel to continue its operations in July this year.