RBI Imposes Monetary Penalties On Three NBFCs For Regulatory Non-compliance

The Reserve Bank of India (RBI) has imposed monetary penalties on three non-banking financial companies (NBFCs) for regulatory lapses and non-compliance with several RBI directives. The penalties, issued between 3 and 11 September 2024, were levied on Hewlett Packard Financial Services (India), SMFG India Credit Company, and Muthoot Vehicle and Asset Finance.

On 3 September 2024, Hewlett Packard Financial Services was fined Rs 10,40,000 for non-compliance with RBI's 'Know Your Customer (KYC)' guidelines. The penalty followed an RBI inspection of the company’s financial position as of 31 March 2022, targeting systemically important non-deposit-taking NBFCs.

"This penalty has been imposed in exercise of powers conferred on RBI under the provisions of clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58 B of the Reserve Bank of India Act, 1934" said the RBI.

SMFG India Credit Company, formerly Fullerton India Credit Company, was penalised Rs 23,10,000 on 4 September 2024 for violating the RBI’s Information Technology (IT) and cybersecurity guidelines. During an April 2023 control gap assessment, it was found that the company failed to monitor outsourced vendors, conduct necessary IS audits, and retain critical audit logs.

On 11 September 2024, Muthoot Vehicle and Asset Finance faced a penalty of Rs 7,90,000 for failing to comply with RBI's liquidity risk management framework. The company was found to have omitted its Liquidity Coverage Ratio (LCR) from its website, did not submit customer data to credit information companies, and failed to provide loan sanction letters in the vernacular language for vehicle loan borrowers.

In each case, the RBI clarified that the penalties addressed regulatory deficiencies rather than the validity of transactions. Further action may be taken if necessary.