If you’ve ever used a digital wallet or a payment app like PhonePe, you’ll know how convenient it is. But have you ever wondered what goes on behind the scenes to keep your money safe? Well, India’s central bank, the Reserve Bank of India (RBI), is keeping a very close eye on these things. And recently, they had a few words—and a penalty—for PhonePe.
The RBI just hit PhonePe with a ₹21 lakh fine. Now, that might not sound like a lot for a company of PhonePe’s size, it’s more of a slap on the wrist. The penalty wasn’t for anything that affected your transactions, so your payments were safe all along. It was about a behind-the-scenes issue with a special account called an “escrow account.”
Think of an escrow account as a locked box where a company like PhonePe holds the money you’ve put into its wallet. The rules say that at the end of every single day, the money in that locked box must be equal to the amount of money people have in their wallets, plus any money owed to merchants. The RBI’s inspection, which looked at PhonePe’s operations from late 2023 to the end of 2024, found that on a few days, the balance in PhonePe’s escrow account was a little short.
And here’s the other part of the problem: PhonePe didn’t report this shortfall to the RBI right away, which is also against the rules. So, after a lot of back and forth, including a formal notice and a hearing, the RBI decided the penalty was warranted. It’s basically the RBI’s way of saying, “Hey, you need to be more careful with your bookkeeping and reporting!”
The RBI’s Watchful Eye
If you think this is a one-off thing, think again. The RBI has a long history of cracking down on companies—both big and small—that don’t follow the rules. It’s all about making sure the financial system is safe and trustworthy for everyone.
Earlier this year, the RBI put some major restrictions on Paytm Payments Bank, even stopping it from onboarding new customers. That was a much bigger deal, and it was also due to regulatory compliance issues. Banks like ICICI Bank and the State Bank of India (SBI) have also faced hefty fines for lapses related to everything from cybersecurity to customer data. So, the message is clear: whether you’re a giant legacy bank or a fast-moving fintech startup, the RBI is watching, and it expects everyone to play by the rules. It’s all part of the job of keeping India’s booming digital economy running smoothly.
