The Reserve Bank of India (RBI) on Thursday, April 6, imposed a fine of Rs 6.77 crore on non-banking finance company Mahindra & Mahindra Financial Services Ltd (MMFSL) for non-compliance with regulatory norms.
The penalty has been imposed on MMFSL for non-compliance with the systemically important non-deposit-taking company and deposit-taking company directions issued by RBI.
"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 central bank said in a press release.
According to the apex bank, the statutory inspection of the company was conducted by RBI with reference to its financial position on March 31, 2019, and March 31, 2020.
"An examination of the Risk Assessment Report, Inspection Reports and all related correspondence pertaining to the same revealed, inter alia, non-compliance by the company with the RBI directions on fair practices relating to disclosure of annualised rate of interest charged on loans to the borrowers at the time of sanction and failure to give notice of change in terms and conditions of loan to its borrowers, when it charged higher rate of interest than what was communicated at the time of sanction, during financial years 2018-19, 2019-20 and 2020-21," the central bank said.
Further, a notice was issued to the company advising it to show cause as to why a penalty should not be imposed on it for failure to comply with the RBI directions.
"After considering the company’s reply to the notice, oral submissions made during the personal hearing and on examination of additional submissions made by it, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty," the apex bank said.
This penalty has been imposed in the exercise of powers vested in RBI under the provisions of the Reserve Bank of India Act, 1934, it added.
