The Reserve Bank of India (RBI) on February 20, 2018 directed payments banks to get their coustomers information verified by third parties, in a blow to Bharti Airtel Ltd which runs a payments bank with customer data verified by its own telecom business. An RBI letter sent to chief executive officers of payments banks said "reliance on KYC (know-your-customer) done by telecom companies is not permessible".
The third party has to be regulated, supervised monitored and should have steps in place for compliance with customer due diligence and record-keeping requirements, in line with the requirement of the prevention of Money Laundering Act. Payments banks have been directed to comply with RBI Master Direction on KYc, which is amended time to time, for all its customers.
The move comes after Airtel was penalized by UIDI for allegedly openting paymemnts bank accounts without the explicit consent of users. Both Bharti Airtel and Airtel Payments Bank were barred from conducting Aadhaar-based SIM verification of mobile customers using eKYC process as well as e-KYC of payments bank clients., following allegations that Bharti Airtel was using the Aadhaar-eKYC based SIM of its subscribers without their informed consent.
Until now, telcos such as Airtel had an edge over payments banks from India Post and Paytm, as the old norms allowed KYC done for mobile connection to be extended to opening bank accounts. This allowed telecom operators with payments bank licences to providebank accounts to all of their existing telecom customers with minimum effort and no extra cost. However, the latest direction puts all payments firms on par and could prove to be costly for telcos.
