The Reserve Bank of India (RBI) fined Ola Financial Services Ltd, the unit that looks after the ride hailing app’s finance management, Rs.1.67 crore for non-compliance against its prepaid payment instrument (PPI), including Know Your Customer KYC guidelines.

“It was observed that the entity was non-compliant with the directions issued by RBI on KYC requirements. Accordingly, notice was issued to the entity advising it to show cause as to why penalty should not be imposed for non-compliance with the directions,” says RBI.

According to RBI, the financial penalty is based on regulatory compliance shortcomings rather than being intended to rule on the legality of any transaction or agreement that Ola Financial has made with its clients.

As per documents submitted by ANI Technologies (which operates Ola) to the Registrar of Companies (RoC), Ola has received the nod to "make an investment in Ola Financial Services Pvt Ltd up to Rs 786,64,12,400 in-kind consideration against swap of shares of the company".

Ola Financial Services, formerly Zipcash Card Services Pvt Ltd, runs the OlaMoney Wallet PPI, the OlaMoney Postpaid digital credit line, and a co-branded credit card with SBI Card.

It also offers insurance, and last year it had plans to increase its insurtech presence in the UK, Australia, and New Zealand.

The compliance standards that certain payment and lending fintech firms must adhere to have drawn a strict response from India's central bank.

The RBI prohibited PPIs from being loaded through credit lines last month. Additionally, it has been attempting to further control the area.

Ola announced in March that it was ready to purchase Avail Finance, a website that offers loans and financial services to blue-collar workers.

A vital component of Ola's mobility business, Ola Financial has sold over 675 million insurance.

According to ANI Technologies' most recent regulatory filing, OFS is seeking to grow its insurance business globally in order to complement the company's mobility service with goods made for the UK and Australia and New Zealand (ANZ) markets.

In addition to the twin impact on the mobility company and its spillover to the OlaMoney brand, it had been reported that OFS had a challenging year (FY21) due to the influence of external variables on the lending environment generally. In addition to expanding its agreements with the top retailers in the ecosystem, OFS had introduced a flurry of new goods and capabilities in the loan and insurance industries.

“After considering the entity’s response, RBI concluded that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty.”