RBI Slaps Penalties on Three NBFCs for Regulatory Violations

The Reserve Bank of India has fined three non-banking financial companies for non-compliance with directives. Penalties were imposed on Hewlett Packard Financial Services (India) Private Limited, SMFG India Credit Company Limited, and Muthoot Vehicle & Asset Finance Limited between September 3 and September 11, 2024.

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

On September 3, 2024, Hewlett Packard Financial Services (India) Private Limited incurred a penalty of Rs 10,40,000 due to non-compliance with 'Know Your Customer (KYC)' guidelines and other directives for systemically important non-deposit-taking NBFCs. This fine was based on an inspection of the company's financial position as of March 31, 2022. The RBI cited its authority under sections of the RBI Act, 1934, to impose this penalty.

The following day, SMFG India Credit Company Limited was fined Rs 23,10,000 for violating IT and cybersecurity guidelines. An assessment in April 2023 revealed the company failed to include monitoring provisions in vendor contracts, neglected network and security system audits, and did not retain critical audit logs. On September 11, 2024, Muthoot Vehicle & Asset Finance Limited was penalized Rs 7,90,000 for non-compliance with RBI's liquidity risk management framework. Statutory inspections found the company failed to disclose its Liquidity Coverage Ratio (LCR) on its website, did not submit customer data to credit information companies, and neglected to issue loan sanction letters in vernacular languages to vehicle loan borrowers.

The RBI clarified that the penalties were strictly for regulatory compliance deficiencies and did not reflect on the validity of any transactions or agreements. Further actions may be taken if necessary.

(With inputs from agencies.)