RBI in action:
The Reserve Bank of India (RBI) has, by an order dated April 15, 2024, imposed a monetary penalty of ₹10 lakh (Rupees Ten lakh only) on NABFINS Limited, Bengaluru (the company), a subsidiary of NABARD, for non-compliance with certain provisions of the Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016. This penalty has been imposed in the exercise of powers conferred on RBI under the provisions of clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58 B of the Reserve Bank of India Act, 1934.
The statutory inspection of the company was conducted by RBI concerning its financial position as of 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 a penalty should not be imposed on it for its failure to comply with the said directions.
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 charge on the adoption of the restrictive practice of forcing its customers to go in only for a particular insurance company in respect of assets financed by it was sustained, warranting imposition of monetary penalty.
This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
