RBI imposes Monetary Penalty on Finance Corporation; Know the Reason:

RBI imposes Monetary Penalty on Finance Corporation; Know the Reason The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.5.00 lakh (Rupees Five lakh only) on Housing Development Finance Corporation Limited, Mumbai (the company) for non-compliance with certain provisions of ‘The Housing Finance Companies (NHB) Directions, 2010’ issued by the National Housing Bank (NHB) read with the press release dated August 13, 2019 issued by RBI on ‘Transfer of Regulation of Housing Finance Companies (HFCs) to Reserve Bank of India’, by an order dated March 13, 2023. This penalty was imposed in accordance with the requirements of clause (b) of sub-section (1) of section 52A and clause (aa) of sub-section (3) of section 49 of the National Housing Bank Act, 1987. This action is based on regulatory compliance problems and is not intended to rule on the legitimacy of any transaction or agreement entered into by the company with its consumers. The statutory inspection of the company was conducted by NHB with reference to its financial position as of March 31, 2020, and examination of the Inspection Report, supervisory letter, and all related correspondence pertaining to the same revealed, among other things, that the company failed to transfer matured deposits of certain depositors to designated bank accounts of such depositors during the period 2019-20. In addition, a notice was given to the corporation instructing it to show cause why a penalty should not be levied on it for failing to comply with the directives indicated therein. After reviewing the company's response to the notice, additional submissions made by it, and oral submissions made during the personal hearing, the RBI determined that the charge of non-compliance with the aforementioned statutory directions was substantiated and warranted imposition of monetary penalty on the company, to the extent of non-compliance with the directions.