RBI slaps monetary penalty on Poonawalla Fincorp

The Reserve Bank of India (RBI) said on Friday that it had slapped a monetary penalty on Poonawalla Fincorp. The penalty, amounting to Rs 10 lakh, was over non-compliance with certain provisions of its directions on systematically important non-deposit-taking and deposit-taking companies relating to its Fair Practices Code for NBFCs, according to an official statement.

"This penalty has been imposed in the 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 banking regulator. 

Earlier, the RBI issued issued a show case notice to Poonawalla Fincorp asking why the maximum penalty should not be imposed on it for its failure to comply with its directions, after conducting certain inspections on the company. 

After considering the company’s response to its notice, the RBI found that the following charge against the company was sustained, warranting the imposition of a monetary penalty.

"The company charged interest on loans from dates prior to the dates of disbursal of these loans, which was contrary to the terms and conditions of the loans communicated to the customers," the RBI said. 

It also said that the action is based on "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 also said that the imposition of this penalty is without prejudice to any other action that may be initiated by it against the company.

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