Mahindra & Mahindra Financial Services, Indian Bank, and Muthoot Money Penalised by RBI
Moneylife Digital Team 07 April 2023
Reserve Bank of India (RBI) has imposed monetary penalties on Mahindra & Mahindra Financial Services Ltd, Indian Bank and Muthoot Money Ltd for non-compliance with multiple laws prescribed by the apex bank. RBI levied a penalty of Rs6.77 crore, the highest among the three, on Mahindra & Mahindra Financial Services for charging a higher interest rate than communicated while sanctioning the loan. 
RBI says, "After considering the reply of the two non-banking finance companies (NBFCs) and Indian Bank to the notices, submissions made during the personal hearing, and additional information furnished pursuant to the personal hearing, RBI came to the conclusion that the charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty."
Mumbai-based NBFC Mahindra & Mahindra Financial Services violated RBI's NBFC- systemically important non-deposit-taking company and deposit-taking company (RBI) directions. 
A statutory inspection of the NBFC revealed that it charged a higher rate of interest than what was communicated at the time of loan sanction during financial years (FY)18-19, FY19-20, and FY20-21 and failed to give notice of change in terms and conditions of the loan to its borrowers. A penalty of Rs6.77 crore was imposed on Mahindra & Mahindra Financial Services.
For the failure to undertake KYC (know-your-customer) measures as mandated while opening an account in the name of a sole proprietary firm Indian Bank was directed by the apex bank to remit a penalty of Rs55 lakh. 
Ernakulam-based Muthoot Money Ltd was found violating certain provisions of RBI directions on monitoring fraud in NBFCs. The statutory inspection of the company was conducted by RBI which discovered the non-compliance by the NBFC with RBI's directions to the extent it reported certain frauds to RBI with delay. After the hearing of submissions and perusal of necessary documents, the apex bank imposed a penalty of Rs10.50 lakh.
Free Helpline
Legal Credit