**Summary:**
On September 12, 2025, the Reserve Bank of India (RBI) issued a press release announcing a monetary penalty of ₹21 lakh (Twenty-One Lakh only) imposed on PhonePe Limited (formerly known as PhonePe Private Limited). The penalty is for non-compliance with certain RBI directions pertaining to Prepaid Payment Instruments (PPIs). The action was taken under Section 30(1) read with Section 26(6) of the Payment and Settlement Systems Act, 2007.
An RBI statutory inspection of PhonePe's operations, covering the period from October 2023 to December 2024, revealed the non-compliance. Specifically, the end-of-day balance in PhonePe's escrow account was found to be less than the value of outstanding PPIs and payments due to merchants on certain days, and the company did not immediately report this shortfall to the RBI.
The press release clarifies that the penalty is based on deficiencies in regulatory compliance and does not invalidate any transactions or agreements between PhonePe and its customers. The imposition of the monetary penalty does not preclude the RBI from initiating further action against the company.
For further information, contact Puneet Pancholy, Chief General Manager, at the Department of Communication, Reserve Bank of India, Central Office, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001, or via email at helpdoc@rbi.org.in, or phone at 022-2266 0502. The RBI's website is www.rbi.org.in.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector and monetary policy.
PhonePe Limited: A company that was formerly known as PhonePe Private Limited, on which RBI imposed monetary penalty.
Mumbai, Maharashtra: City in India, location of the Reserve Bank of India's Department of Communication.
Payment and Settlement Systems Act, 2007: An act of the Indian Parliament that provides the legal framework for the regulation and supervision of payment systems in India.
Prepaid Payment lnstruments PPIs: A payment instrument that stores funds electronically, which can be used to purchase goods and services.
Section 301: A section of the Payment and Settlement Systems Act, 2007, under which powers are conferred on RBI.
Section 266: A section of the Payment and Settlement Systems Act, 2007, under which powers are conferred on RBI.
Puneet Pancholy: Chief General Manager at Reserve Bank of India.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
September 12, 2025
RBI imposes monetary penalty on PhonePe Limited (formerly known as
PhonePe Private Limited)
The Reserve Bank of India (RBI) has, by an order dated September 10, 2025,
imposed a monetary penalty of ₹21 lakh (Rupees Twenty One Lakh only) on PhonePe
Limited (formerly known as PhonePe Private Limited) (the company) for non-
compliance with certain directions issued by RBI on ‘Prepaid Payment lnstruments
(PPIs)’. This penalty has been imposed in exercise of powers conferred on RBI under
the provisions of Section 30(1) read with Section 26(6) of the Payment and Settlement
Systems Act, 2007.
The statutory inspection of the company was conducted by RBI 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, a notice was issued to the company advising it to show
cause as to why 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 following charge against the company was sustained, warranting imposition of
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 shortfall in the said escrow account to RBI immediately.
The action 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. Further, imposition of monetary penalty is without
prejudice to any other action that may be initiated by RBI against the company.
(Puneet Pancholy)
Press Release: 2025-2026/1094 Chief General Manager