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On October 2020, RBI has slapped a penalty of Rs.1 Crore on Jio Payment Bank.  JPB is a venture of Reliance with 70% holding and SBI 30%. 

The contents of RBI Press Release

The press release says, “The bank was required to submit an application under section 35B of the Act in the case of reappointment of MD & CEO of the bank, four months prior to the date on which the term of the MD & CEO was to expire but submitted the said application less than a month prior to the date.”

In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for its’ failure to comply with the directions issued by RBI. After considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions, RBI concluded that the aforesaid charge of non-compliance with RBI directions was established and warranted imposition of monetary penalty.

The press release gives a feeling that there is more than what meets the eye.

Is it only this lapse?

Will RBI take action only for a simple lapse? What more is happening with Jio Payment Bank?

The Payment Bank was given licence in 2015 along with another 10 payment bank licences. It started operations in 2018 April. Mr. H. Sri Krishnan is the MD & CEO. He was Executive Director of Yes Bank which almost collapsed but saved by public sector banks and financial institutions. He had stated that Jio Payment Bank will have 70000 banking outlets but we don’t see any. He also claimed that 380 million Reliance Jio customers will be their clients. But now nothing seems to work.  Already some payment banks like Aditya Birla have closed shop. 3 others did not start operations at all. Now we have only 5 out of 11. They are Paytm, Airtel, Fino, Jio and India Posts. 

What is to be watched is the functioning of these 5 payment banks. 

Jio Payment Bank’s MD & CEO gets Rs. 2 Crores as salary & allowances but could not submit details to RBI as per statutes? The last annual general meeting was held on 30th Sept 2019 and balance sheet as on 31st March 2019 has been filed showing a loss of RS.1.10 Cr. A report in the Mint dated 12 July 2020 quoting Reliance Industries Ltd annual general meeting says Jio Payment Bank is awaiting a formal launch. It also says Reliance is getting into other financial services like Insurance broking, Mutual Fund Products etc. 

Why Jio Payment Bank has not released balance sheet of 31st March 2020 yet?

Why SBI has appointed Mr. Rajesh Kumar retired chief general manager as director? How Mr. R.K. Saraf, former DMD and CFO of SBI became independent director in JPB?

How many people from SBI are working at Jio Payment Bank?

Will RBI and SEBI look into the affairs of JPB?

Is Jio Payment Bank going to have a natural death like Aditya Birla Payment Bank?

Will SBI quit the joint venture which is not profitable and which is bringing bad name?

There are lot of questions which needs to be asked and answered. Hope some investigation is done quickly before people get cheated.

Thomas Franco is former General Secretary of All India Bank Officers’ Confederation.

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Thomas K Cherian
Thomas K Cherian
2 months ago

Everything is applicable to Jio and Reliance. RBI had only looked into one aspect of misappropriation with JPB. My question is why after getting licenses in 2015 these banks are not starting the operation. There are 6 banks that have not established the transaction till today after 5 years?

RBI should treat every institution with one mandate.