Why has RBI issued Rs. 1 Cr fine on Mobikwik & Spice Money?

The Reserve Bank of India (RBI) has issued a monetary penalty of Rupees 1 crore on Mobikwik and Spice Money. It has issued a fine for non-compliance with the net-worth requirements for Bharat Bill Payment Operating Units.

According to a press release, the actions are “based on deficiencies in compliance are not intended to pronounce upon the validity of any transaction or agreement entered into by the entities with their customers”.

What non-compliance?

These compliances are related to RBI’s direction on implementation of Bharat Bill Payment System (BBPS) Guidelines. For more background, BBPS is an integrated bill payment system in India. It offers interoperable and accessible bill payment service to customers through a network of agents, enabling multiple payment modes, and providing instant confirmation of payment.

The National Payment Corporation of India implements the BBPS. Mobikwik here is one entity that operates as a Bharat Bill Payment Operating Unit. Such operators should have a net worth of at least Rs. 100 crore as per the last audited balance sheet and the same has to be maintained at all times.

According to the RBI, Mobikwik and Spice Money had not complied with these directions.

The Contravention and Penalty

Section 26(6) of the Payment and Settlement Systems Act, 2007, talks about a penalty for any contravention of any direction given under the Act. Further, the Act empowers the RBI to impose fines under Section 30.

The Section provides for a penalty not exceeding five lakh rupees or twice the amount involved in such contravention. If the default is a continuing one, it can impose a further penalty of twenty-five thousand rupees per day.

The RBI had imposed another penalty of Rs. 15 lakh on Mobikwik in 2019, for non-compliance with regulatory guidelines. The RBI has recently ordered a Forensic Audit of Mobikwik after the firm denied hacking charges. Responding to an RTI, the RBI said that Mobikwik has submitted the audit report, which is still under examination.

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Rohit Ranjan Praveer

Rohit is a practicing advocate at Delhi. Beginning as a tech enthusiast, Rohit always had a keen interest in computer forensics and information security. Building upon these fundamentals, he has undertaken extensive research on various techno-legal topics and continues his pursuit pass on valuable information to the masses, with a zeal to build something that outlasts him.​

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