RBI inflicts Rs 1.68 Cr penalty on Ola Financial Services
Ola Financial Services, the subsidiary of mobility startup Ola, failed to adhere to the prepaid payment instruments (PPIs) and know your customer (KYC) norms, according to RBI.
The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1.68 crore on Ola Financial Services Private Limited, a subsidiary of mobility startup , for non-compliance with prepaid payment instruments (PPIs) and know your customer (KYC) norms.
The central bank said in a release that it imposed the penalty in the exercise of powers vested under Section 30 of the Payment and Settlement Systems Act, 2007.
The bank’s action is based on deficiencies in regulatory compliance and it said it does not intend to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers.
“It was observed that the entity was non-compliant with certain provisions of the Master Directions on PPIs dated August 27, 2021 (as updated from time to time) and the Master Direction – Know Your Customer (KYC) Direction, 2016 dated February 25, 2016 (as updated from time to time),” it said.
After considering the entity’s response, RBI concluded that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted the imposition of a monetary penalty.
RBI imposed Rs 1.68 crore penalty on Ola Financial Services
Giving reasons for imposing the penalty on Ola Financial Services (OFS), the RBI said that it had earlier sent a show-cause notice to the company upon observing that it was breaching the KYC norms, but Ola could not provide a suitable answer.
In December 2021, Ola had reportedly planned an investment of up to Rs 786.1 crore in its subsidiary OFS, as per regulatory documents assessed by PTI.
OFS has launched a slew of products and capabilities in both the lending and insurance businesses, including Ola Money, OlaMoney Postpaid, and OlaMoney Credit cards, and has partnered with leading merchants in the ecosystem.
It is looking to expand its suite of products by launching new lending offerings in the form of two-wheeler, four-wheeler, and personal loans to offer a comprehensive financial product ecosystem to the customer, as per the filing.
In March 2022, the company announced plans to acquire Avail Finance, a neobank that provides financial services to the blue-collared workforce and has over six million users, to have a broader push into the fintech space and build a mobility-focused financial service business. The company said partnership will enable it to cross-sell multiple lending products to its large driver-partner base.
In 2019, the company applied for an NBFC license with the RBI.
Edited by Kanishk Singh