RBI unhappy over payments banks' licence surrender, hints at penalty

However, surrendering licences is not a crime and current regulations do not enable the central bank to charge a penalty, said RBI deputy governor SS Mundra

Reserve Bank of India (RBI) Deputy Governor S S Mundra on Monday expressed his displeasure at applicants surrendering their payments bank licences and hinted at hefty penalty for firms who indulge in such practices.

Two months after Cholamandalam dropped its plans for floating a payments bank, Dilip Shanghvi of Sun Pharma, IDFC Bank and Telenor Financial Services last week said they were not interested in establishing the niche bank either, without giving any reason. “Yes, we would certainly feel a little aggrieved because a lot of efforts from the part of the RBI goes in processing these applications. So, having done that, if they don’t materialise, that’s the only point (of disappointment),” Mundra said at the sidelines of an event by Banking Codes and Standards Board of India.  However, surrendering licences is not a crime and the current regulations do not enable the central bank to charge a penalty, he said.  

“Currently, we don’t have a scope of charging a serious processing fee, which can be forfeited if this kind of exercise is done,” Mundra said, adding, in jest: “But if we learn by experience, probably we can do something, which can help augment our revenue substantially.”

It took RBI more than a year to finalise on the 11 names, which are fit to operate payments banks — niche players that can accept deposits up to Rs 1 lakh but cannot lend. RBI’s draft guidelines on payments banks came on July 17, 2014 and the list of 11 awardees were announced on August 19, 2015. The nine entities remaining now are Reliance-SBI combine; Aditya Birla Nuvo (Idea Cellular), Airtel, Vodafone, Department of Posts, FINO PayTech, Tech Mahindra, National Securities Depository Ltd, and Paytm (Vijay Shekhar Sharma).

Assuring that the central bank did not go by a merit list to pick up the top applicants, but gave licences to anyone who fit the bill, the deputy governor said the question of replacement did not arise.

“The question of replacement will come if you have a pre-determined number, that was not the case. All applications that met the eligibility norms were given the licences,” Mundra said.

Mundra also said RBI is working on rules that would limit a customer’s liability in case of cyber frauds. While there is already a cap of Rs 10,000 for every cyber fraud that can happen, the RBI would like to have a relook on it as technology and banking channels have undergone changes.