New Delhi, Aug 16 (FN Agency) The Reserve Bank of India (RBI) on Friday imposed a monetary penalty on three leading financial firms namely Bank of Maharashtra, Hinduja Leyland Finance Limited and Poonawalla Fincorp for “non-compliance” with certain directions issued by the Central Bank. The Central bank imposed a monetary penalty of Rs 1,27,20,000 on Bank of Maharashtra for non-compliance with certain directions issued by RBI on ‘Loan System for Delivery of Bank Credit’, ‘Cyber Security Framework in Banks’ and ‘Know Your Customer’. The Statutory Inspection for Supervisory Evaluation of the bank with reference to its financial position as on March 31, 2023 and Information Technology (IT) examination of the bank in May 2023 were conducted by RBI. 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 maximum penalty should not be imposed on it for its failure to comply with the said directions, the RBI said in a statement.
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 (i) failed to ensure that the minimum outstanding ‘loan component’ was, at least, the specified percentage of the sanctioned fund based working capital limit for certain borrowers, (ii) failed to implement fraud risk management system across all delivery channels (iii) had allotted multiple customer identification code to certain customers instead of a Unique Customer ldentification Code (UCIC) for each customer and (iv) had allowed operations in certain small accounts that did not meet the regulatory requirement. The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transactions 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.
The RBI has also imposed a monetary penalty of Rs 4.90 lakh on Hinduja Leyland Finance Limited for non-compliance with certain provisions of the RBI’s KYC Directions, 2016. 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 did not put into use a robust software to throw alerts when the transactions were inconsistent with risk categorization and updated profile of the customers, as part of effective identification and reporting of suspicious transactions. In a similar action, the RBI has imposed a monetary penalty of Rs 10 lakh on Poonawalla Fincorp Limited, Pune, Maharashtra for non-compliance with certain provisions of the ‘Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company Directions of 2016 issued by RBI, relating to ‘Fair Practices Code for NBFCs’. 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 maximum penalty should not be imposed on it for its failure to comply with the said directions. The company charged interest on loans from dates prior to the dates of disbursal of these loans, which was contrary to the terms and conditions of the loans communicated to the customers, the RBI said in a statement.