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RBI Imposes Rs 1 Crore Penalty Each on Mobikwik and Spice Money; Know Why

RBI imposes Rs 1 crore penalty each on Mobikwik and Spice Money

Both One Mobikwik Systems Private Limited – parent company of Mobikwik – and Spice Money Limited have been penalised for committing offences of the nature referred to in Section 26 (6) of the PSS Act.

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1 crore each on payment platforms Mobikwik and Spice Money. In a press statement, RBI said that the penalties have been imposed on these two payment service operators (PSOs) under provisions of Section 30 of the Payment and Settlement Systems Act, 2007 (PSS Act). “These actions are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the entities with their customers,” RBI said.

Both One Mobikwik Systems Private Limited – parent company of Mobikwik – and Spice Money Limited have been penalised for committing offences of the nature referred to in Section 26 (6) of the PSS Act.

According to Section 26 (6) of the PSS Act, a person or a company shall be punishable with a fine if any provision of the act is contravened by them. Section 30 of the PSS Act, 2007 gives power to RBI to impose fines.

Section 30 says, “Reserve Bank may impose on the person contravening or committing default a penalty not exceeding five lakh rupees or twice the amount involved in such contravention or default where such amount is quantifiable, whichever is more.”

Any penalty imposed by the RBI under section 30 of the PSS act shall be payable within a period of 30 days from the date on which notice was issued by the Reserve Bank.

RBI said that it was observed that the One Mobikwik Systems Private Limited and Spice Money Limited had not complied with the directions issued by RBI on the net-worth requirement for Bharat Bill Payment Operating Units (BBPOUs). “As these were offenses of the nature referred to in Section 26 (6) of the PSS Act, notices were issued to the entities,” the RBI statement read.

RBI slapped the penalties after reviewing the written responses and oral submissions made by the two entities during the personal hearing. The central bank concluded that the charges of non-compliance were substantiated and warranted the imposition of monetary penalty.

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