RBI imposes Monetary Penalty on Nido Home Finance Limited

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.1.55 lakh on Nido Home Finance Limited (formerly known as Edelweiss Housing Finance Limited) (the company) for non-compliance with certain provisions of the Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021, by an order dated September 13, 2023.

The National Housing Bank Act of 1987’s clauses (b) of sub-section (1) of Section 52A and (aa) of sub-section (3) of Section 49 give RBI the authority to impose penalties. As a result, this fine has been imposed.

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.

The correspondence regarding the transfer of specific company shares between its two group companies revealed, among other things, that the company had failed to request RBI’s prior written consent for a change in its shareholding due to gradual increases over time, resulting in the acquisition of shareholding above the allowed limit.

Consequently, a notice was sent to the company instructing it to provide justification as to why a penalty should not be levied against it for failing to follow the instructions provided in the RBI notice.

RBI came to the conclusion that the charge of failure to comply with the aforementioned RBI directions was substantiated and called for the imposition of a financial penalty after taking into account the company’s response to the notice, additional submissions made by it, and oral arguments made during the personal hearing.