RBI fined three housing finance companies, action for non-compliance of instructions
Reserve Bank: RBI said that based on the non-compliance with the central bank's instructions and the related correspondence in that regard, a notice was issued to the companies, advising them to show cause why they should not be fined for non-compliance of RBI's instructions.
Reserve Bank of India tightened action against housing finance companies for non-compliance on various instructions of RBI. Under this, monetary penalty has been imposed on three non-banking financial companies. In the official statement of RBI, which came on Friday, monetary penalty of Rs 5 lakh on Godrej Housing Finance Limited, Rs 5 lakh on Aadhar Housing Finance Limited, and Rs 3.5 lakh on Housing and Urban Development Corporation Limited has been imposed.
This action has been initiated invoking the powers given to RBI under the provisions of Section 52A of the National Housing Bank Act, 1987. According to the RBI, the statutory inspection of these companies was conducted by the National Housing Bank with the reference of their financial position as of March 31, 2022.
The RBI said that based on the non-compliance of the central bank's directions observed and the related correspondence in that regard, a notice was issued to the companies, advising them to show cause as to why they should not be penalized for non-compliance with the RBI directions.
Considering the replies received to the notice from the companies, oral submissions during personal hearings, as well as additional submissions made by them, the RBI observed that Godrej Housing Finance Ltd. failed to obtain two independent valuation reports prior to sanctioning certain loans of Rs 75 lakh and above.
For Aadhar Housing Finance Ltd, the RBI said, the company has charged interest on loans for a period prior to the date of actual disbursement of loan/issuance of cheque from the date of credit of loan amount to the borrower's account in respect of some borrowers, in contravention to the Reserve Bank's directions on 'Code of Fair Practices'.
The fine has been levied on Housing and Urban Development Corporation Limited as the company failed to conduct risk assessment of its customers during the financial year 2021-22. It neither created any system for periodic review of risk classification of accounts nor did it comply with the directions as per Section 29B of the NHB Act.
