These actions on the 2 entities are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, September 4, 2024: The Reserve Bank of India (RBI) has, by separate orders dated August 28, 2024, imposed a monetary penalty on the 2 entities. These actions on one Mahila Co-operative Bank, and one NBFC are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI.
RBI has imposed monetary penalty on RAR Fincare, Chennai, Tamil Nadu and Durgapur Mahila Co-operative Bank Limited, Kolkata.
1 The Reserve Bank of India (RBI) has, by an order dated August 28, 2024, imposed a monetary penalty of Rs 25,000/- (Rupees Twenty Five Thousand only) on RAR Fincare Limited, Chennai, Tamil Nadu (the company) for non-compliance with certain provisions of ‘Master Direction- Non-Banking Financial Company–Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016’ read with ‘Master Direction-Reserve Bank of India (Non-Banking Financial Company-Scale Based Regulation) Directions, 2023’, issued by RBI. This penalty has been imposed in exercise of powers vested in RBI, conferred 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 on change in management of NBFC. 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 its for 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, inter alia that the company failed to take prior written permission of the RBI for effecting 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 deficiency 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 August 28, 2024, imposed a monetary penalty of Rs1.00 lakh (Rupees One lakh only) on Durgapur Mahila Co-operative Bank Limited, Kolkata (the bank) for non-compliance with certain provisions of ‘Master Circular on Investments by Primary (Urban) Co-operative Banks’ issued by RBI. This penalty has been imposed in exercise of powers vested in RBI, conferred under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
The statutory inspection 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 circular 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 circular. After considering the bank’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 charges against the bank were sustained, warranting imposition of monetary penalty: The bank had breached (i) prudential inter-bank counter party limit, and (ii) prudential inter-bank (gross) exposure limit.
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 bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
