RBI imposes monetary penalty on Kosamattam Finance Company; Know Reason

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.13.38 lakh on Kosamattam Finance Limited, Kottayam (the company) 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”.

RBI conducted a statutory inspection of the company with reference to its financial position as of March 31, 2022, and examination of the Risk Assessment Report, Inspection Report, supervisory letter, and all related correspondence revealed, among other things, that the company (i) did not submit credit information pertaining to gold loan accounts to Credit Information Companies and (ii) did not maintain LTV ratio of 75% in certain loan accounts, duly.

As a result, the company was served with a notice requiring it to show cause why a penalty should not be levied for failing to comply with the RBI’s orders, as specified therein.

After reviewing the company’s response to the notice, as well as additional submissions made by it and oral submissions made during the personal hearing, the RBI concluded that the charge of non-compliance with the aforementioned RBI directions was substantiated and warranted imposition of monetary penalty.

This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 25(1)(iii) read with Section 23(4) of the Credit Information Companies (Regulation) Act, 2005 (CIC (R) Act) and Section 58G (1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934 (RBI Act).

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.