Yes Bank to tighten compliance process for fintech partnerships says CEO Prashant Kumar

Yes Bank’s chief also said that fintech partnerships play a key role in aiding growth and reaching people.

The chief executive officer of Yes Bank Prashant Kumar has said that the compliance process and due-diligence checks have become tighter on fintech partnerships after Reserve Bank of India’s regulatory clampdown on Paytm Payments Bank.

“Earlier our focus was more on what we are doing, the nature of partnerships that we are getting into and whether we are complainant, however now we are seeing what our partners are doing, checking their customers as well. This takes a lot of effort but the cost of non-compliance is even higher than the cost of compliance,” said Kumar at a media briefing in Bengaluru on February 28th.

He also added that while there is a “ tick-box approach” for checking compliance the process now has extended beyond just a background check on the fintech that gets into the bank’s partnership to now checking their customers as well.

Also read: Paytm crisis: Compliance issues, regulatory overhang keep mutual funds away

“We used to check and make sure that our credit underwriting is as per regulations but today I would also like to verify and check the customers who are getting pushed by our fintech partners. Whether my partner is completing all KYC and due diligence. Whether all the algorithms used by us and the fintech partners are also validated continuously and there is no risk around it,” Kumar added.

The CEO’s words come at a crucial time as the Reserve Bank of India (RBI) imposed crippling restrictions on Paytm Payments Bank Limited (PPBL), an associate company of One97 Communications including accepting fresh deposits and doing credit transactions after March 15th.

Sources say that the reason behind the move was due to compliance issues and regulatory overhangs.

Last week, The chief of the National Payments Corporation of India (NPCI), Dilip Asbe also said that compliance should be the key priority. “Whatever is not laid down in regulations means a no…When we are part of managing other people’s money, we should be responsible," he said.

Also Read: Top startup investors stress on corporate governance, compliance amid Byju's, Paytm Bank turmoil

Yes, Bank is among the top banks in India to strike a lot of partnerships with fintechs and is known for collaborating with startups for technology and business use cases. Yes Bank acts as a Payment Service Provider (PSP) for payment apps like PhonePe and BharatPe.

Yes Bank’s chief also said that fintech partnerships play a key role in aiding growth and reaching people.

“Striking partnerships with fintechs is very important for us. These partnerships give access to a large customer database and how this can be monetised will be key. There are opportunities for cross-selling and more,” Kumar said.