Lok Sabha Question No. 3656 (UNSTARRED), answered on 2018-03-16
Subject: New Verification Rule for Payment Banks
Ministry: FINANCE
Asked by: T. RADHAKRISHNAN, NARANBHAI KACHHADIA, VIJAY KUMAR S.R., BIDYUT BARAN MAHATO, GAJANAN CHANDRAKANT KIRTIKAR, ANWHAR RAAJHAA, KUNWAR HARIBANSH SINGH, ASHOK SHANKARRAO CHAVAN

## GOVERNMENT  OF INDIA

## LOK SABHA UNSTARRED QUESTION NO. 3656

## MINISTRY OF FINANCE DEPARTMENT  OF FINANCIAL SERVICES

TO BE ANSWERED  ON THE 16 TH  MARCH 2018/ PHALGUNA 25, 1939 (SAKA)

New Verification  Rule for  Payment  Banks

3656.  SHRI T. RADHAKRISHNAN:

SHRI NARANBHAI  KACHHADIYA:

SHRI S.R.  VIJAYAKUMAR:

SHRI BIDYUT BARAN MAHATO:

SHRI GAJANAN  KIRTIKAR:

SHRI A.  ANWHAR  RAAJHAA:

KUNWAR HARIBANSH  SINGH:

SHRI ASHOK SHANKARRAO CHAVAN:

## Will  the Minister  of FINANCE  be pleased to state:

- (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?

## ANSWER

## The Minister  of State in the Ministry  of Finance (SHRI SHIV PRATAP  SHUKLA)

- (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.