According to persons with knowledge of the situation, the Reserve Bank of India (RBI) is likely to take regulatory action against more Fintech companies due to shortcomings in know-your-customer (KYC) procedures.
The individuals mentioned above, who requested anonymity and did not reveal their identities, stated that a well-known payments aggregator and wallet service provider are on the list of fintech businesses that may face legal action. They said that a number of fintech companies that function as middlemen between borrowers and lenders in the unsecured loan market are being investigated.
The regulatory measure is being implemented in tandem with an ongoing audit by the Financial measure Task Force (FATF) of India's financial institutions' overall readiness to address money laundering and financing of terrorism.
Due to compliance errors in its KYC procedure, the RBI severely restricted Paytm Payments Bank on January 31. One of the individuals mentioned above stated, "At least four more payment companies are already under the watch for similar lapses."
Another stated, "The general consensus among regulators is that KYC systems implemented by fintech companies are not robust enough when compared to traditional banks."
