RBI Slaps Rs73.20 Lakh Penalty on BNP Paribas, 3 Other NBFCs for Non-compliance
Moneylife Digital Team 16 September 2024
Reserve Bank of India (RBI) has imposed penalties of Rs73.20 lakh on BNP Paribas and three non-banking financial companies (NBFCs), including Hewlett Packard Financial Services (India) Pvt Ltd, SMFG India Credit Company Ltd and Muthoot Vehicle & Asset Finance Ltd for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs31.80 lakh has been imposed on BNP Paribas. 
 
BNP Paribas has been penalised for non-compliance with directions on interest rates on advances.
 
RBI's statutory inspection revealed that BNP Paribas failed to adopt uniform external benchmarks regarding certain loans within the same loan category. 
 
SMFG India Credit Company, formerly Fullerton India Credit Company Ltd, has been fined Rs23.10 lakh. The company was found to violate RBI's master direction on information technology for the NBFC sector and cybersecurity measures. Specifically, the company failed to ensure that contracts with outsourced vendors included proper monitoring and oversight provisions. It also has not conducted an information systems (IS) audit for its network and security solutions since its inception. 
 
Additionally, SMFG India Credit Company neglected to ensure adequate storage and retention of audit logs for its email gateway and failed to act on a critical malware alert from an infected server, RBI says.
 
Hewlett Packard Financial Services has been fined Rs10.40 lakh for non-compliance with several guidelines, including know-your-customer (KYC) directions, regulations for NBFCs and the master direction on information technology for the NBFC sector. The company failed to implement a system for periodic review of risk categorisation of accounts. It also did not clearly disclose or communicate the interest rate, the approach to risk gradation, and the rationale for charging different interest rates to various borrower categories. Additionally, it did not establish an IT strategy committee and an IT steering committee.
 
Muthoot Vehicle & Asset Finance has been penalised Rs7.90 lakh for failing to comply with RBI directions on the liquidity risk management framework for NBFCs and core investment companies (CICs). The company did not disclose the liquidity coverage ratio information on its website, failed to submit data regarding its gold loan customers to the four CICs and did not convey in writing the amount of loan sanctioned along with the terms and conditions in the vernacular language as understood by the vehicle loan borrowers, by means of a sanction letter or otherwise.
 
In all four 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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