RBI imposes monetary penalty on five Prepaid Payment Instrument (PPI) Issuers - (03 May 2019)
The Reserve Bank of India has imposed monetary penalty on five PPI Issuers for non-compliance of regulatory guidelines in exercise of its powers under Section 30 of the Payment and Settlement Systems Act, 2007. A penalty of ₹3.05 crore has been imposed on Vodafone m-pesa and ₹1 crore each on Mobile Payments, PhonePe and G.I. Technology Private Ltd. Also, a penalty of ₹5 lakh has been imposed on Y-Cash Software Solutions. Further, in a separate statement, the central bank had imposed a penalty of ₹29.67 lakh on Western Union Financial Services Inc., USA., and ₹10.12 lakh on MoneyGram Payment Systems Inc, USA, for non-compliance of regulatory guidelines.
PPIs are instruments that facilitate purchase of goods and services, including financial services, remittance facilities, etc., against the value stored on such instruments. PPIs that can be issued in the country are classified under three types viz. (i) Closed System PPIs, (ii) Semi-closed System PPIs, and (iii) Open System PPIs.
PPI issuer is an entity operating / participating in a payment system for issuing PPIs to individuals / organisations. The money so collected is used by the entity to make payment to the merchants who are part of the acceptance arrangement and for facilitating funds transfer / remittance services. A holder is an individual / organisation who obtains / purchases PPI from the PPI issuer and uses the same for purchase of goods and services, including financial services, remittance facilities, etc. However, in case of a Gift PPI, the targeted beneficiary (though not being a purchaser) can also be a holder.
PPI issuers are required to disclose all important terms and conditions in clear and simple language to the holders while issuing the instruments. These disclosures shall include: all charges and fees associated with the use of the instrument and the expiry period and the terms and conditions pertaining to expiration of the instrument. Full disclosure about the conditions and the potential risks involved in payment system is essential and non-compliance of guidelines empowers RBI to levy penalty on issuers.
Tags : PENALTY LEVY PPI ISSUERS