The Reserve Bank of India (RBI) imposed monetary penalties on the following three financial institutions for Regulatory Non-Compliance:
Bank of Maharashtra
Hinduja Leyland Finance Ltd and
Poonawalla Fincorp Ltd
On August 8, 2024, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹1,27,20,000 on the Bank of Maharashtra for failing to comply with RBI directives on key regulatory frameworks. The penalty, issued under sections 47A(1)(c), 46(4)(i), and 51(1) of the Banking Regulation Act, 1949, addresses violations found during the Statutory Inspection for Supervisory Evaluation (ISE 2023) and an Information Technology (IT) examination in May 2023. The RBI's findings highlighted several non-compliance issues:
The bank did not maintain the minimum required loan component as a percentage of the sanctioned fund-based working capital limit for some borrowers.
The bank failed to implement a fraud risk management system across all delivery channels.
The bank issued multiple customer identification codes instead of a single Unique Customer Identification Code (UCIC) for some clients.
Certain small accounts were operated without meeting regulatory requirements.
On August 8, 2024, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹4.90 lakh on Hinduja Leyland Finance Limited for failing to adhere to the Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016. This action was taken under the authority granted by clause (b) of sub-section (1) of section 58G and clause (aa) of sub-section (5) of section 58B of the Reserve Bank of India Act, 1934. The penalty follows an RBI inspection of the company's financial position as of March 31, 2022, which revealed non-compliance with KYC regulations. Specifically, the company failed to implement a robust software system capable of generating alerts for transactions inconsistent with customer risk profiles and updated information, which is crucial for identifying and reporting suspicious activities.
On August 12, 2024, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹10.00 lakh on Poonawalla Fincorp Limited, Pune, Maharashtra, for non-compliance with the ‘Non-Banking Financial Company - Systemically Important Non-Deposit Taking Company and Deposit Taking Company (Reserve Bank) Directions, 2016,’ specifically concerning the ‘Fair Practices Code for NBFCs.’ The penalty was imposed under the authority granted by clause (b) of sub-section (1) of section 58G and clause (aa) of sub-section (5) of section 58B of the Reserve Bank of India Act, 1934. This action followed a statutory inspection of the company’s financial position as of March 31, 2022, which revealed that the company charged interest on loans from dates before the actual disbursement of these loans. This practice was inconsistent with the loan terms communicated to customers, constituting a breach of fair practices as prescribed by RBI directions.
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