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RBI Directs Fino Payments Bank To Stop Opening New Accounts

RBI Directs Fino Payments Bank To Stop Opening New Accounts

RBI has pulled up Fino Payments for not following its regulation on capping deposits at $1459 (INR 1 lakh)

It has directed Fino to put in place appropriate process to address the operating guidelines on deposit limits

Fino Payments Bank will continue to operate existing accounts, also permitted to open minimal KYC wallets

Mumbai-based Fino Payments Bank has become the latest entrant to a growing but a small list of payments banks that are being told to stop account opening operations till they strictly adhere to the guidelines given by the Reserve Bank Of India (RBI).

The central bank mandates payments banks to restrict deposits to $1459 (INR 1 lakh). Fino Payments Bank is not following this rule, so, the RBI has directed it to put in place appropriate processes to adhere to operating guidelines on deposit limits in customer accounts.

This move will be a spanner in the works of Fino Payments’ goal to increase its customer base across the country. Earlier, in line with this target, the payments bank announced a plan to raise $43.8 Mn (INR 300 Cr) by October-November of this year.

In a press release, commenting on the RBI’s decision, it said, “Fino Payments Bank continues to operate all existing accounts of our customers. We are also permitted to open minimal KYC wallets. As such our existing customers continue to do banking transactions be it deposits, withdrawal, money transfer, bill payments and third-party offerings without any inconvenience.”

Fino, which has a customer base of 1 Mn, had plans to increase this figure to 3 Mn by March next year on the back of the network expansion.

The RBI has already taken to task companies such as Paytm Payments Bank, which had to stop enrolling new customers on June 20 following an audit by the central bank. In the audit, the RBI made certain observations about the process followed by Paytm Payments Bank in acquiring new customers and its adherence to know-your-customer (KYC) norms.

Also, Airtel Payments Bank was finally permitted to onboard new customers only a month ago after a 10-month ban. Airtel was banned from onboarding new customers by the RBI because of irregularities in taking consent from customers while opening their accounts and diverting DBT (direct benefit transfer) payments into those accounts.

Yesterday (August 1), the same day as Fino announced the RBI’s decision, another payments service, WhatsApp Payments, was told by the Indian government that the company can’t launch WhatsApp Pay till it sets up an office and recruits a team in India.

All these developments come at a time when the Aadhaar data privacy debate is raging on in the country with no signs of dissipating. A few days ago, Trai chairman R S Sharma tweeted his Aadhaar number, throwing an open challenge to people to do him harm based on the number.

The series of clampdowns by the RBI may not be directly related to the privacy debate but are part of the larger debate at whose centre lies the Aadhar card issue.