Question : New Verification Rule for Payment Banks

(a) whether the Government has taken cognizance of alleged opening of payment bank accounts without the explicit consent of users, if so, the details thereof and the action taken by the Reserve Bank of India (RBI) on these payment banks;

(b) whether the RBI has issued new verification rule for payments banks recently, if so, the aims and objectives thereto;

(c) whether the Government has assess the estimated cost of current KYC on companies per customer and if so, the details thereof; and

(d) whether such move by the RBI has any additional operational and cost burden for payment banks and if so, the details thereof?

The Minister of State in the Ministry of Finance


(a): The Reserve Bank of India (RBI) has apprised that Airtel Payments Bank Limited had opened customer accounts without clear/specific consent of customers, and after giving it an opportunity to show cause why penalty should not be imposed for non-compliance with RBI’s guidelines and directions, vide order dated March 7, 2018, RBI imposed a monetary penalty of Rs. 5 crore on the bank.

(b): RBI has informed that, vide its letter dated February 20, 2018 addressed to Payment Banks, it clarified that telecom companies, not being included in ‘Reporting Entities’ in terms of the Prevention of Money Laundering Act, are not subject to the requirements of the said Act and, therefore, reliance on know your customer (KYC) procedure for verification done by telecom companies is not permissible. Accordingly, RBI has clarified that paragraph 8(ii) of the Operating Guidelines for Payments Banks is modified as under:

“A PB [Payments Bank] shall comply with the extant RBI Master Direction on KYC, as amended from time to time, for all its customers, including existing customers of telecom companies onboarded by the PB.”

(c): Instructions relating to KYC procedure have been issued by RBI. RBI has apprised that it has not conducted any estimation of cost of current KYC procedure on Payments Banks.

(d): RBI has informed that after issuance of the letter dated February 20, 2018, no communication has been received from Payments Banks regarding any implication on their operational and cost burdens.
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