India's central bank said on Thursday it has imposed a penalty of 53.9 million rupees ($647,762.58) on Paytm Payments Bank for non-compliance with some provisions, including Know Your Customer (KYC) directions.
According to the Reserve Bank of India (RBI), Paytm Payments Bank had failed to identify beneficial owners of entities on-boarded by it for providing payout services.
It also did not monitor payout transactions and carry out risk profiling of entities availing payout services, among others.
The RBI had last year barred Paytm Payments Bank from taking on new customers and ordered a comprehensive audit of its IT systems, citing "material" supervisory concerns observed in the bank.
Paytm Payments Bank had also breached the regulatory ceiling of end-of-the-day balance in certain customer advance accounts that were availing payout services, the central bank said in a statement.
Further, the lender had reported a cyber security incident with delay, the RBI added.
Paytm, which competes with players such as Google Pay and Walmart's PhonePe in India, saw its founder and CEO Vijay Shekhar Sharma becoming the largest shareholder in the company after Chinese firm Antfin sold its stake in August.
This came amid broader concerns about Chinese ownership in Indian financial technology companies.
Earlier this year, China's Alibaba Group sold its remaining stake in Paytm for about 13.78 billion rupees through a block deal.
