RBI fines PhonePe ₹21 lakh for non-compliance with PPI regulations

Mumbai, Sep 13, 2025

RBI penalises PhonePe Rs 21 lakh for failing to report escrow shortfalls under PPI norms, marking its third penalty since 2019 over compliance issues

The Reserve Bank of India (RBI) has imposed a penalty of Rs 21 lakh on fintech company PhonePe for non-compliance with certain directions under the prepaid payment instruments (PPI) norms.

The RBI said the end-of-day balance in the company’s escrow account was lower than the value of outstanding PPIs and payments due to merchants on certain days.

The Bengaluru-based fintech firm also failed to immediately report this shortfall in its escrow account to the RBI, the regulator said.

The RBI conducted a statutory inspection of the company between October 2023 and December 2024.

“Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions,” the regulator said in a statement.

According to guidelines, all non-bank issuers like PhonePe are required to immediately report any shortfall in escrow balances to the Department of Payment and Settlement Systems (DPSS) of the RBI.

The norms state that escrow account balances must not be lower than the value of outstanding PPIs and payments due to merchants at the end of a day.

PPIs are payment instruments such as digital wallets that enable the purchase of goods and services, including financial services, against the value stored in them.

In 2019, the RBI imposed a monetary penalty of Rs 1 crore on PhonePe for non-compliance with PPI guidelines. In 2020, the regulator fined the company Rs 1.39 crore for violations of regulatory norms.

[The Business Standard]