A fine of INR 33.40 Lakh was imposed on the fintech arm of ride-hailing giant Ola for non-compliance with know your customer (KYC) norms
Another penalty of INR 54.15 Lakh was imposed for contravening master directions on prepaid payment instruments (PPIs)
The fines were imposed by the RBI in exercise of powers under Section 30 and Section 31 of the Payment and Settlement Systems Act, 2007
The Reserve Bank of India has imposed a penalty of INR 87.55 Lakh on Ola Financial Services
for flouting various regulatory norms.
While a fine of INR 33.40 Lakh has been imposed on the fintech arm of ride-hailing giant Ola for non-compliance with know your customer (KYC) norms, another penalty of INR 54.15 Lakh has been imposed for contravening master directions on prepaid payment instrument (PPI).
For the uninitiated, Ola Financial Services is the fintech arm of the ride-hailing major and runs OlaMoney.
In a statement, the RBI said Ola Financial Services was issued a show cause notice to explain why the penalty should not be imposed on the company.
“… After considering their written responses and the oral submissions made during the personal hearing, RBI concluded that the aforesaid charges of noncompliance with RBI directions were substantiated and warranted imposition of monetary penalty,” said the central bank.
It also said that Ola Financial Services had reported instances of shortfall in balance in its escrow account and filed an application for compounding of the violation. After hearing the company’s plea and oral submissions, the RBI “determined” that the contraventions could be compounded, and imposed the fine.
Simply put, compounding refers to an entity voluntarily pleading guilty for a violation and seeking redressal.
The fines have been imposed by the RBI in exercise of powers under Section 30 and Section 31 of the Payment and Settlement Systems Act, 2007.
This is not the first time that Ola Financial Services has landed in a soup. In 2022, the central bank slapped a penalty of INR 1.67 Cr on the company for similar non-compliances with PPI and KYC norms.
Earlier this year, Ola founder and CEO Bhavish Aggarwal’s brother Ankush Aggarwal returned to Ola Financial Services as its new chief executive.
Meanwhile, Ola Financial Services slipped into the red in the fiscal year 2022-23 (FY23) with a net loss of INR 54.6 Cr. The company had reported a profit of INR 8.6 Cr in the previous fiscal year.
Its operating revenue declined 22% to INR 85.5 Cr in FY23 from INR 110 Cr in FY22.
