Airtel Payments Bank removes 1,000 retailers from network for flouting norms
Airtel Payments Bank has terminated relationships with nearly 1,000 retailers for not following the due process while signing up customers, after the banking arm of the country’s largest telecom carrier conducted internal investigations to zero in on errors and lapses that led to its Aadhaar-based e-KYC licence getting suspended.
People familiar with the matter said the company levied a penalty of around 50 times the commission paid on several retailers who violated the guidelines for the first time, and removed repeat offenders from the network besides imposing a fine on them.Read more ↓
All retail partners have been warned of strict action for any violation of the guidelines. The company launched the probe after the Unique Identification Authority of India in mid-December suspended Airtel and Airtel Payments Bank from conducting Aadhaar-based verification of customers following complaints of the telecom company using the Aadhaar-eKYC based SIM verification process to open payments bank accounts of its subscribers without taking their ‘informed consent’. Such accounts were also linked to get subsidy from the government.
During the probe, “it was observed that some of the retailers that were also acting as designated banking points had not informed customers about savings account opening and direct benefit transfer (DBT) receipts in an upfront manner. Wherever multiple violations have been found, relationships have been terminated,” said one of the people.
About 1,000 retailers have been removed from the network and penalised as of December, and the number is likely to rise as the investigation continues. Bharti Airtel and Airtel Payments Bank did not respond to emails seeking comment.
The subsidy-transfer issue came into the limelight after state-run oil companies and the oil ministry claimed that Rs 167 crore of LPG subsidies had been deposited in accounts in Airtel Payments Bank without the knowledge of customers.
UIDAI, while suspending the e-KYC licence, had imposed a fine of Rs 2.5 crore on the payments bank. It later allowed Bharti Airtel to resume Aadhaar-based e-KYC verification of telecom subscribers till January 10 to facilitate linking of Aadhaar with mobile SIMs as per a Supreme Court directive.
UIDAI also asked the Reserve Bank of India, Department of Telecommunications and audit and consultancy firm PricewaterhouseCoopers to conduct audits of Bharti Airtel and Airtel Payments Bank to see whether their systems, processes, applications, documentations and other aspects were compliant with licence conditions. The reports are expected to come in by January 10, a senior official at UIDAI said. The e-KYC licence of the payments bank remains suspended, the person cited earlier said.
Airtel’s chief executive, Gopal Vittal, had admitted to lapses in governance in its customer authentication process. The fiasco had led to the exit of the payments bank’s chief executive officer, Shashi Arora.
Airtel has deposited Rs 2.5 crore as penalty with the authority, its executives had said, and added that almost the full Rs 167 crore with a 7.25% interest had been returned to the original DBT accounts of some 55.63 lakh beneficiaries.
“It is a scar; the brand value can get affected … and it’s a long-term issue,” said brand consultant Harish Bijoor, adding that competition had the ability to stoke the fire further. “It is extremely important that the brand stand up and say that it’s honest and forthright, and that these are business issues that can happen. The brand should not just be honest, but appear to be honest as well,” he added.
The payments bank arm of the company was the first to launch services in January 2017, offering basic banking services excluding loans. Kotak Mahindra owns 20% in Airtel Payments Bank.
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