These actions on 2 leading HFCs and 1 leading NBFC are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, August 13, 2024: The Reserve Bank of India (RBI) has, by separate orders in August 2024, imposed a monetary penalty on 2 leading HFCs and 1 NBFC.
RBI has imposed monetary penalty on Muthoot Housing Finance Company, Nido Home Finance and Ashoka Viniyoga, as per the press releases issued by the RBI on 12 August, 2024.
The Reserve Bank of India (RBI) has, by an order dated August 7, 2024, imposed a monetary penalty of Rs5,00,000/- (Rupees Five Lakh only) on Muthoot Housing Finance Company Limited (the company) for non-compliance with certain provisions of the 'Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021' issued by RBI relating to 'Governance'. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of section 52A of the National Housing Bank Act, 1987.
The statutory inspection of the company was conducted by the National Housing Bank 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 maximum 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 oral submissions made by it during the personal hearing, RBI found that the company failed to take prior written permission of the RBI for change in management resulting in change of more than 30 per cent of its directors, excluding independent directors, warranting imposition of monetary penalty.
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. 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 August 08, 2024, imposed a monetary penalty of Rs5,00,000/- (Rupees Five Lakh only) on Nido Home Finance Limited (the company) for non-compliance with certain provisions of the direction on ‘Co-Lending by Banks and NBFCs to Priority Sector’ issued by RBI. This penalty has been imposed in exercise of powers vested in RBI conferred under section 52A of the National Housing Bank Act, 1987.
The statutory inspection of the company was conducted by the National Housing Bank 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 maximum 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, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found, inter alia, that the following charge against the company was sustained, warranting imposition of monetary penalty. The company failed to ensure that (i) the loan agreements with the borrowers clearly contained the features of the co-lending arrangement and the roles and responsibilities of the company and co-lending bank and (ii) all the details of the arrangement were disclosed to the customers upfront, and their explicit consent was taken.
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 August 08, 2024, imposed a monetary penalty of Rs3,10,000/- (Rupees Three Lakh Ten Thousand only) on Ashoka Viniyoga Limited (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’ issued by the RBI, relating to ‘Governance Issues’. 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.
The correspondence pertaining to the intimation of appointment of directors revealed, inter alia, non-compliance with RBI directions. Based on the same, 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 said directions.
After considering the company’s reply to the notice and oral submissions made during the personal hearing, RBI found that the company failed to take prior written permission of the RBI for change in management resulting in change of more than 30 per cent of its directors, excluding independent directors, warranting imposition of monetary penalty.
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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
