Mumbai | The Reserve Bank of India on Friday said it has imposed a penalty of Rs 21 lakh on PhonePe Limited for non-compliance with certain norms related to 'Prepaid Payment Instruments' (PPIs).

In a statement, the RBI said a statutory inspection of the company was conducted by the central bank with reference to its operations for the period from October 2023 to December 2024.

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

After considering the company's reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found, inter alia, that the charge against the company was sustained, warranting imposition of a monetary penalty.

"The end-of-the-day balance in the escrow account of the company was less than the value of outstanding PPls and payments due to merchants on certain days, and the company did not report a shortfall in the said escrow account to RBI immediately," it said.

RBI also said the penalty is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers.