The Reserve Bank of India (RBI) on Friday, stated that it has imposed monetary penalties on four financial institutions including, BNP Paribas, Hewlett Packard Financial Services, SMFG India Credit Company, and Muthoot Vehicle & Asset Finance, for non-compliance with its regulatory directions.
BNP Paribas has been fined Rs 31,80,000 for failing to comply with its guidelines on ‘Interest Rate on Advances.’ The penalty follows supervisory findings of non-compliance, where the bank failed to adopt a uniform external benchmark for loans within the same category.
Hewlett Packard Financial Services has been fined Rs 10,40,000 for multiple regulatory violations. The RBI found that the company had failed to implement a system for periodically reviewing the risk categorisation of accounts. Additionally, it did not adequately communicate interest rates, risk gradations, or the rationale for different interest rates to various borrower categories in both the loan application forms and sanction letters.
Moreover, the company did not form the required IT Strategy and IT Steering Committees, further contributing to its non-compliance.
On the same day, the central bank also cancelled the Certificate of Registration of four NBFCs, alongwith 13 NBFCs that surrendered their CoRs due to various reasons.
The Reserve Bank of India (RBI) announced the cancellation of the Certificate of Registration (CoR) of four Non-Banking Financial Companies (NBFCs), while 13 others voluntarily surrendered their CoR on account of various factors including exits from the business, mergers, and compliance with Core Investment Company (CIC) regulations.
SMFG India Credit Company has been penalised Rs 23,10,000 for several lapses. The company failed to include provisions for monitoring and oversight in its contracts with outsourced vendors, did not conduct an Information Systems (IS) audit for its Network and Security Solutions since its inception, and did not retain or analyze audit logs from its email gateway. Furthermore, the company neglected to take action on critical malware alerts, exposing it to additional risks.Muthoot Vehicle & Asset Finance has been fined Rs 7,90,000 for non-compliance with various RBI guidelines. The company failed to disclose its Liquidity Coverage Ratio on its website, did not submit required data concerning gold loan customers to all four Credit Information Companies, and did not communicate the loan amount, terms, and conditions to vehicle loan borrowers in the vernacular language, either through a formal sanction letter or any other written format.
The banking regulator said that these penalties are based on deficiencies in statutory and regulatory compliance and are not intended to challenge the validity of any existing transactions or agreements between the institutions and their customers.
