RBI imposes Rs 1 crore penalty on PNB

KEY STORY

• The Reserve Bank of India (RBI) cancelled the certificates in the exercise of the powers conferred on it under the Payment and Settlement Systems Act, 2007.

• Mumbai: State-run Punjab National Bank on Friday said the RBI has imposed a penalty of Rs 1 crore on it for contravention of the Payment and Settlement Systems Act.

• “RBI has observed that the Bank was operating a bilateral ATM sharing arrangement with Druk PNB Bank Ltd, Bhutan, (an international subsidiary of the Bank), since April, 2010 without the prior approval/authorisation from RBI,” it said in a stock exchange filing.

• The Reserve Bank of India (RBI) imposed the Rs 1 crore penalty for “contravention of nature referred to in Section 26 (6) of the Payment and Settlement Systems Act, 2007 (PSS Act)”, it added.

• PNB’s shares closed at Rs 29.50 apiece on BSE, up 1.37 per cent. Meanwhile, in a statement, the RBI said it has cancelled the Certificate of Authorisation (CoA) of five Payment System Operators (PSOs) engaged in issuance and operation of prepaid payment instruments.

• The certificates of Card Pro Solutions Private Limited and InCashMe Mobile Wallet Services Private Limited were cancelled because of ‘noncompliance with regulatory requirements’, while Delhi Integrated Multi-Modal Transit System Limited and Pyro Networks Private Limited voluntarily surrendered their certificates.

CONCLUSION

• The CoA of Aircel Smart Money Limited was cancelled because of non-renewal. All these five entities were into issuance and operation of prepaid payment instruments (PPIs).

• The RBI said following the cancellation of the CoA, the entities cannot transact the business of issuance and operation of PPIs.

• However, customers or merchants having a valid claim, if any, on these companies as PSOs, can approach them for settlement of their claims within three years from the date of cancellation, it added.

• The Reserve Bank of India (RBI) cancelled the certificates in the exercise of the powers conferred on it under the Payment and Settlement Systems Act, 2007.