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RBI restricts withdrawals from Mantha Urban Coop Bank; Cancels CoAs of 5 PSOs & Imposed Rs 1 crore penalty on PNB

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RBI-restricts-withdrawals-from-Jalna-based-Mantha-Urban-Coop-Bank-for-6-monthsIn exercise of powers vested in it under sub section (1) of Section 35 A of the Banking Regulation Act, 1949 read with Section 56 of the Banking Regulation Act, 1949, the Reserve Bank of India (RBI) imposed restrictions on withdrawals from Jalna, Maharashtra-based Mantha Urban Cooperative Bank for six months from November 17, 2020.

  • The bank can also not grant loans or make any investments without prior approval of the RBI in writing.

–RBI cancels Certificate of Authorisation of five PSOs

The Reserve Bank of India has also cancelled the following Certificate of Authorisation (CoA) of the five Payment System Operators (PSOs) in exercise of the powers conferred on it under the Payment and Settlement Systems Act, 2007:

i.Pyro Networks Private Limited:
Location– Hyderabad,  Telangana
Reason for Cancellation– Voluntary Surrender

ii.Card Pro Solutions Private Limited:
Location– Mumbai, Maharashtra
Reason for Cancellation– Non-compliance with regulatory requirements

iii.Aircel Smart Money Limited
Location– Gurugram, Haryana
Reason for Cancellation– Non-renewal

iv.InCashMe Mobile Wallet Services Private Limited:
Location– Ahmedabad, Gujarat
Reason for Cancellation– Non-compliance with regulatory requirements

v.Delhi Integrated Multi-Modal Transit System Limited
Location– Kashmere Gate, Delhi
Reason for Cancellation– Voluntary surrender

Now, the above companies cannot do the business of issuance and operation of Prepaid Payment Instruments (PPIs) but customers having a valid claim on these companies can approach them for settlement of their claims within three years from the date of cancellation.

–RBI imposes Rs 1 crore penalty on Punjab National Bank; 5 non-bank PPI issuers also penalized

RBI has imposed Rs 1 crore penalty on Punjab National Bank (PNB) for unauthorised bilateral ATM sharing arrangement with one of the international subsidiaries of the bank namely Druk PNB Bank Ltd., Bhutan since April 2010 without the prior approval  from RBI.

  • The penalty has been imposed by RBI after exercising powers under Section 30 of the Payment and Settlement Systems Act, 2007.

RBI also imposed penalties on other five entities which are non-bank prepaid payment instrument (PPI) issuers for non-compliance of regulatory guidelines. These are as follows:

Entity Bank
Sodexo SVC India Private Limited Rs 2 cr
Phonepe Private Limited Rs 1 cr 39 Lakh
QwikCilver Solutions Private Limited Rs 1 cr
Muthoot Vehicle & Asset Finance Ltd. Rs 34.55 Lakh
Delhi Metro Rail Corporation Limited Rs 5 Lakh

Apart from above RBI also imposed monetary penalty of Rs 20 lakh on Bengaluru, Karnataka -based Shushruati Souharda Sahakara Bank Niyamita for deficiencies in regulatory compliance and Rs 1 lakh on the Deccan Urban Co-operative Bank, Vijayapura, Karnataka, for contravention of the directions issued by it on prohibition of loans and advances to directors.

  • These were imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949.

What are prepaid payment instruments (PPIs)?

Prepaid payment instruments facilitate purchase of goods and services against the value stored on such instruments’. These are issued by companies incorporated in India and registered under the Companies Act, 1956 / Companies Act, 2013.

Recent Related News:

i.On September 29, 2020, the Reserve Bank of India (RBI) deferred implementation of provisions made under Basel III capital due to uncertainty related to Covid crisis. In this regard, RBI will repel the final tranche of the capital conservation buffer (CCB) and the implementation of net stable funding ratio (NSFR) by six months i.e. April 1, 2021.

ii.RBI also extended the enhanced borrowing facility provided to banks under the marginal standing facility (MSF) scheme by six months till March 31, 2021. It was initially available up to June 30, 2020 and was later extended up to September 30, 2020 due to economic disruptions amid COVID-19.

About Punjab National Bank (PNB):

Managing Director & Chief Executive Officer – CH S.S. Mallikarjuna Rao

Tagline – The Name you can bank upon

Head Quarter – New Delhi