The Reserve Bank of India has imposed a monetary penalty of ₹5.80 lakh on Appnit Technologies Private Limited for non-compliance with regulatory directions related to Know Your Customer (KYC) norms and Prepaid Payment Instrument (PPI) guidelines.
The penalty order was issued on May 11, 2026, under the provisions of the Payment and Settlement Systems Act, 2007, following findings from a statutory inspection of the company’s operations.
Reason Behind RBI Action
According to the central bank, the inspection covered Appnit Technologies’ operations between April 2024 and August 2025. During this review, supervisory authorities identified deficiencies in compliance with customer verification and risk management requirements.
Following the inspection findings, the company was issued a show-cause notice asking it to explain why enforcement action should not be taken for regulatory breaches.
After evaluating the company’s response and submissions, the RBI concluded that certain lapses were established and warranted monetary penalty action.
Key Compliance Violations Identified
The RBI highlighted two major areas of non-compliance:
- Violation in PPI KYC validity: The company allowed prepaid payment instrument accounts opened using Aadhaar OTP-based e-KYC to remain active beyond the permitted one-year period without completing full customer verification as required.
- Weak risk monitoring system: The company failed to implement a periodic review mechanism for customer risk categorisation, which is essential for identifying suspicious transactions and maintaining ongoing due diligence.
These deficiencies were considered non-compliance with regulatory standards governing digital payment operations and customer due diligence frameworks.
Focus on Strengthening Payment System Compliance
The action reflects the regulator’s continued emphasis on ensuring strong compliance practices within India’s growing digital payments ecosystem. Regulatory requirements for KYC verification and risk monitoring are designed to maintain transparency, reduce fraud risk, and strengthen the integrity of financial transactions.
As digital payment adoption expands rapidly, compliance expectations for fintech and payment service providers continue to remain stringent, particularly in areas involving customer onboarding and transaction monitoring.
Summary
The Reserve Bank of India has levied a ₹5.8 lakh penalty on Appnit Technologies for violations related to KYC norms and PPI regulations. The action follows a statutory inspection that identified lapses in customer verification processes and risk classification monitoring systems, reinforcing the regulator’s strict stance on compliance in India’s digital payments sector.
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