These actions on 4 entities are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, September 13, 2024: The Reserve Bank of India (RBI) has, by separate orders in September 2024, imposed a monetary penalty on one bank and three NBFCs. These actions on the concerned bank and three NBFCs are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI today on September 13, 2024.
RBI has imposed monetary penalty on Muthoot Vehicle & Asset Finance; SMFG India Credit Company; Hewlett Packard Financial Services (India) and BNP Paribas.
1 The Reserve Bank of India (RBI) has, by an order dated September 11, 2024, imposed a monetary penalty of Rs 7,90,000/- (Rupees Seven lakh ninety thousand only) on Muthoot Vehicle & Asset Finance Limited (the company) for non-compliance with certain provisions of RBI directions on ‘Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies’ and ‘Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of clause (b) of sub-section (1) of Section 58G read with clause (aa) of sub-section (5) of Section 58B of the Reserve Bank of India Act, 1934 and clause (iii) of sub-section (1) of Section 25 read with sub-section (4) of Section 23 of the Credit Information Companies (Regulation) Act, 2005.
The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2022. 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 charges against the company were sustained, warranting imposition of monetary penalty.
The company:
did not disclose the information on Liquidity Coverage Ratio on its website;
did not submit data with respect to its gold loan customers to the four Credit Information Companies; and
did not convey in writing the amount of loan sanctioned along with the terms and conditions, in the vernacular language as understood by the vehicle loan borrowers, by means of a sanction letter or otherwise.
This 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 this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
2 The Reserve Bank of India (RBI) has, by an order dated September 4, 2024, imposed a monetary penalty of Rs23,10,000/- (Rupees Twenty three lakh ten thousand only) on SMFG India Credit Company Limited (formerly known as Fullerton lndia Credit Company Limited) (the company) for non-compliance with certain provisions of the ‘Master Direction - Information Technology Framework for the NBFC Sector’ and certain directions relating to cyber security measures issued by RBI. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of clause (b) of sub-section (1) of Section 58 G read with clause (aa) of sub-section (5) of Section 58 B of the Reserve Bank of India Act, 1934.
A control gap assessment of the company was conducted by the Reserve Bank in April 2023. 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 charges against the company were sustained, warranting imposition of monetary penalty.
The company:
did not ensure that the contract between the company and its outsourced vendors contained the provision with respect to monitoring and oversight,
did not conduct IS Audit for Network and Security Solutions since its inception, and
did not ensure adequate storage/retention of audit logs of the email gateway and analyse or take action on a critical alert generated from Endpoint Detection & Response solution for malware detection from an infected server.
This 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 this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
3 The Reserve Bank of India (RBI) has, by an order dated September 3, 2024, imposed a monetary penalty of Rs10,40,000/- (Rupees Ten lakh forty thousand only) on Hewlett Packard Financial Services (India) Private Limited (the company) for non-compliance with certain provisions of the ‘Reserve Bank of India [Know Your Customer (KYC)] Directions, 2016’, ‘Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’ and ‘Master Direction - Information Technology Framework for the NBFC Sector’ issued by RBI. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58 B of the Reserve Bank of India Act, 1934.
The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2022. Based on the 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 and the oral submissions made by it during the personal hearing, RBI found, inter alia, that the following charges against the company was sustained, warranting imposition of monetary penalty.
The company failed to:
put in place a system of periodic review of risk categorization of accounts disclose and explicitly communicate the rate of interest and the approach for gradations of risk and rationale for charging different rate of interest to different categories of borrowers in the loan application form and in the sanction letter; and form an IT Strategy Committee and an IT Steering Committee.
This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
4 The Reserve Bank of India (RBI) has, by an order dated September 2, 2024, imposed a monetary penalty of Rs31,80,000 (Rupees Thirty one lakh eighty thousand only) on BNP Paribas (the bank) for non-compliance with certain directions issued by RBI on ‘Interest Rate on Advances’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47 A (1) (c) read with Sections 46 (4) (i) of the Banking Regulation Act, 1949.
The Statutory Inspection for Supervisory Evaluation (ISE 2023) of the bank was conducted by RBI with reference to its financial position as on March 31, 2023. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank 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 bank’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 bank was sustained, warranting imposition of monetary penalty. The bank failed to adopt uniform external benchmark within the same loan category in respect of certain loans.
The action is based on deficiencies in statutory and regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
