RBI Fines Three Non-Banking Financial Companies for Regulatory Violations

The Reserve Bank of India has levied monetary fines on Godrej Housing Finance Limited, Aadhar Housing Finance Limited, and Housing and Urban Development Corporation Limited for failing to adhere to housing finance directives. The penalties amounting to Rs 13.5 lakh in total were based on inspections and findings by the National Housing Bank.

The Reserve Bank of India (RBI) has imposed monetary penalties on three non-banking financial companies for non-compliance with its directions concerning housing finance. According to an official RBI statement released on Friday, fines of Rs 5 lakh each were levied on Godrej Housing Finance Limited and Aadhar Housing Finance Limited, with an additional Rs 3.5 lakh penalty on the Housing and Urban Development Corporation Limited.

The regulator exercised its powers under Section 52A of the National Housing Bank Act, 1987, to impose these penalties. The National Housing Bank (NHB) inspected these companies, referencing their financial positions as of March 31, 2022. Following supervisory findings and corresponding communications, RBI issued notices to the companies, questioning why penalties shouldn't be imposed for their regulatory failures.

After reviewing the companies' responses, oral submissions during hearings, and additional submissions, RBI identified several non-compliance issues. Godrej Housing Finance Limited failed to obtain two independent valuation reports before approving loans of Rs 75 lakh or higher. Aadhar Housing Finance Limited charged interest on loans before actual disbursement dates, violating RBI's 'Fair Practices Code.' Housing and Urban Development Corporation Limited failed in risk categorization and periodic review processes, and did not create a necessary floating charge on its assets for depositors as required.

(With inputs from agencies.)