RBI fines Airtel bank Rs. 5 crore for violating eKYC-norms
What's the story
India's apex bank, The Reserve Bank of India (RBI) slapped a penalty of Rs. 5 crore on Sunil Mittal owned-Airtel Payments Bank Limited for violating eKYC norms. Last year, it was established that Airtel had been using the Aadhaar-eKYC process to open bank accounts of its customers without their "informed consent." Here's more on this development.
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RBI's observation on penalizing Airtel Payments bank
"The Reserve Bank of India has imposed, on March 7, 2018, a monetary penalty of Rs. 50 million on Airtel Payments Bank Limited for contravening the 'Operating Guidelines for Payments Banks' and directions issued by RBI on Know Your Customer (KYC) norms," said RBI's statement.
Details
How Airtel Payments Bank breached KYC norms
It was learnt last year that Bharti Airtel was using the Aadhaar-eKYC based verification process to open accounts of its customers in Airtel Payments Bank without their "informed consent". According to reports, over 23 lakh customers had received, in total, Rs. 47 crore in their Airtel payments bank accounts. Surprisingly, customers did not even know that they had an Airtel payments bank account.
Context
RBI takes suo moto cognizance of media reports and complaints
Taking suo-moto cognizance of the complaints and reports alleging that Airtel Payments Bank had opened accounts without taking customers' consent, RBI undertook a supervisory visit to the bank between November 20 and 22, 2017. RBI's supervisory visit report and other pertaining documents revealed contraventions of 'Operating Guidelines for Payments Banks' and the directions issued by the country's central bank on KYC norms.
Do you know?
UIDAI suspended Airtel Payments Bank's e-KYC licence over Aadhaar misuse
In December 2017, Unique Identification Authority of India (UIDAI) had suspended Aadhaar linked e-KYC services over an alleged misuse by the company. On December 22, following UIDAI's order, Shashi Arora, CEO and Managing Director of Airtel Payments Bank had stepped down.