Reserve Bank of India (RBI) has imposed penalties totalling ₹23.60 lakh on six non-banking financial companies (NBFCs), including Muthoot Finance Ltd, for violating various regulatory directions relating to know-your-customer (KYC) norms, governance, asset classification and credit concentration limits. The highest penalty of ₹6.20 lakh was imposed on Avail Financial Services Ltd, followed by ₹5.80 lakh on Muthoot Finance Ltd.
The other penalised NBFCs are: Muthoot Vehicle and Asset Finance Ltd, Dhani Loans and Services Ltd, PAN Emami Cosmed Ltd and Satya MicroCapital Ltd.
Muthoot Finance has been penalised ₹5.80 lakh for non-compliance with provisions of the RBI's KYC directions.
During its statutory inspection, RBI found that Muthoot Finance had failed to implement a system for the periodic review of customers’ risk categorisation. It also failed to put in place robust software to effectively identify and report suspicious transactions, in violation of the regulator's KYC norms.
Avail Financial Services has been fined ₹6.20 lakh for non-compliance with provisions of the RBI directions on governance and credit or investment concentration norms. RBI found that the NBFC’s managing director (MD) held directorships in two other NBFCs in the middle layer, in violation of the governance norms. Avail Financial Services was also found to have breached the regulatory single-party exposure limit.
In the case of Satya MicroCapital the NBFC failed to classify certain accounts as non-performing assets (NPA's) upon restructuring. As a result, RBI penalised Satya MicroCapital ₹3.10 lakh.
RBI also penalised PAN Emami Cosmed ₹3.10 lakh for non-compliance with its directions on credit or investment concentration norms. During the inspection, RBI found that the NBFC had breached the prescribed regulatory limit for credit exposure to a single group of related parties.
Further, Muthoot Vehicle and Asset Finance has been penalised ₹2.70 lakh for non-compliance with certain provisions of the RBI's KYC directions. RBI found that the NBFC had failed to implement a system for periodic review of the risk categorisation of customer accounts, as required under the KYC norms. The review was required to be conducted at least once every six months.
Dhani Loans and Services has been penalised ₹2.70 lakh by RBI for non-compliance with its asset classification directions. RBI found that the NBFC failed to classify certain loan accounts as NPAs, as required under its regulations.
In all six cases, RBI clarified that the penalties are based on deficiencies in regulatory compliance and are not intended to pronounce on the validity of any transactions or agreements these entities entered into with their customers.
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