Reserve Bank of India Imposes Penalty on Cashfree Payments Over Compliance Breach

Cashfree Payments, a fintech unicorn, was fined INR 3.1 lakh by the Reserve Bank of India (RBI) for failing to adhere to payment aggregator (PA) and payment gateway (PG) regulations. The Reserve Bank of India (RBI) said in a statement that it had inspected Cashfree in accordance with its statutory mandate from April 2024 through June 2025. The central bank's supervisory investigation revealed some violations of regulations pertaining to PAs and PGs.

Cashfree was then served with a show cause notice by the RBI, which requires the startup to justify the non-imposition of a penalty for non-compliance with the requirements. After receiving the company's response, RBI determined that the company had violated the rules by debiting the escrow account in an unauthorised manner. Cashfree was then fined in an order issued on March 9th.

Statement from RBI

According to the RBI, the accusation against the company for making certain illegal debits from the escrow account was sustained, warranting the imposition of a monetary penalty. The move came after taking into account the company's reply to the notice and other submissions made by it. The penalty was levied by the central bank in exercise of powers under provisions of the Payment and Settlement Systems Act, 2007, namely Section 30(1) and Section 26(6).

Digital payment solutions such as payment gateways, payout solutions, and banking APIs are offered by Cashfree Payments. The brand was founded in 2015 by Akash Sinha and Reeju Datta. With a yearly transaction value of $80 billion, it asserts it has served over 1 million firms since its establishment. The list of clients includes MakeMyTrip, Zomato, CRED, and Delhivery, among many more. Specifically, the fintech soonicorn's net loss increased 14% from INR 135 cr in FY24 to INR 154.1 cr in FY25. Operating revenue fell slightly from INR 642.7 Cr in FY24 to INR 640 Cr in the reviewed fiscal year.

RBI Putting Strict Scanner on Fintechs

The RBI has tightened its grip on irresponsible fintech platforms, and the penalty on Cashfree is only one example of that. Financial technology company Paytm was hit with a compounding order worth INR 18.8 lakh last month by the central bank. The step was taken in response to an alleged violation of the Foreign Exchange Management Act (FEMA).

Groww and Angel One were hit hard when the Reserve Bank of India (RBI) stated in February that they would be tightening regulations on loans against shares and credit facilities to capital market intermediaries. Before this, in December of last year, the RBI ordered some banks to cease issuing credit cards with different brands issued by different companies.