This action is based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, November 17, 2023: The Reserve Bank of India (RBI) has, by separate orders in October and November, 2023, imposed a monetary penalty on 1 bank and 2 NBFCs. RBI) has imposed a monetary penalty on Axis Bank, Anand Rathi Global Finance and Manappuram Finance. These actions on the said 3 entities are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on November 16, 2023.
1 The Reserve Bank of India (RBI) has, by an order dated November 02, 2023, imposed a monetary penalty of Rs.90.92 Lakh (Rupees Ninety lakh and ninety-two thousand only) on Axis Bank Ltd. (the bank) for non-compliance with certain directions issued by RBI on ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’, ‘Loans and Advances – Statutory and Other Restrictions’, ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ and ‘Code of Conduct for Opening and Operating Current Accounts’. This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) of the Banking Regulation Act, 1949.
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 bank with its customers.
Background
The Statutory Inspection for Supervisory Evaluation (ISE 2022) of the bank was conducted by RBI with reference to its financial position as on March 31, 2022. A scrutiny was also conducted by RBI involving an account. The examination of the Risk Assessment Report/Inspection Report pertaining to ISE 2022, Scrutiny Report and all related correspondence in that regard, revealed, inter alia, that the bank (i) failed to preserve records pertaining to the identification of customers and their address in certain cases, (ii) made persistent calls to some of the customers, (iii) failed to ensure appropriate behaviour of recovery agents with some of the delinquent borrowers and (iv) failed to ensure a tape recording of the content/text of the calls made by the recovery agents to some of the customers and (v) did not obtain declarations from the customer at the time of opening of current accounts. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the directions issued by RBI, as stated therein.
After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by it, RBI came to the conclusion that the aforementioned charge of non-compliance was substantiated and warranted imposition of monetary penalty.
2 The Reserve Bank of India (RBI) has, by an order dated October 30, 2023, imposed a monetary penalty of ?20 lakh (Rupees Twenty lakh only) on Anand Rathi Global Finance Limited, Mumbai (the company), for non-compliance with certain provisions of the Reserve Bank of India (Know Your Customer (KYC)) 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 58 G read with clause (aa) of sub-section (5) of section 58 B of the Reserve Bank of India Act, 1934.
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 with its customers.
Background
The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2021 and examination of the Risk Assessment Report, Inspection Report, Supervisory Letter and all related correspondence pertaining to the same revealed, inter alia, that the company failed to carry out on-going due diligence of its customers, when it did not (i) undertake their risk categorisation and (ii) put in to use any robust software for effective identification and reporting of suspicious transactions. Consequently, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the RBI directions, as stated therein.
After considering the company’s reply to the notice and oral submission made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty.
3 The Reserve Bank of India (RBI) has, by an order dated October 31, 2023, imposed a monetary penalty of Rs.42.78 lakh (Rupees Forty two lakh seventy eight thousand only) on Manappuram Finance Limited, Thrissur (the company) for non-compliance with certain provisions of the “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 58 G read with clause (aa) of sub-section (5) of Section 58 B of the Reserve Bank of India Act, 1934.
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 with its customers.
Background
The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2022 and examination of the Risk Assessment Report, Inspection Report, supervisory letter and all related correspondence pertaining to the same revealed, inter alia, the company’s failure to comply with the RBI’s directions on payment to certain borrowers the surplus amounts realised by auction of gold articles pledged by those borrowers during the period from April 01, 2021 to September 30, 2022. Consequently, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the RBI directions, as stated therein.
After considering the company’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions were substantiated and warranted imposition of monetary penalty.
