RBI imposes Rs 10-lakh monetary penalty on NABFINS citing non-compliance

The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2022.

The Reserve Bank of India (RBI) on April 15 imposed a monetary penalty of Rs 10 lakh on NABFINS Limited, a subsidiary of NABARD, for non-compliance with certain rules.

This is related to non-compliance provisions of the non-banking financial company - systemically important non-deposit taking company and deposit taking company directions, 2016, the RBI said.

The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2022.

Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for its failure to comply with rules, the RBI said.

During inspection, the RBI found that the charge pertaining to adoption of restrictive practice of forcing its customers to go in only for a particular insurance company in respect of assets financed by it was sustained, warranting imposition of monetary penalty.

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 RBI said.

Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company, the RBI added.