RBI slaps penalty on Hinduja Leyland Finance

The Reserve Bank of India (RBI) said on Friday that it had imposed a penalty on Hinduja Leyland Finance. The monetary penalty, amounting to Rs 4.9 lakh, was over non-compliance with certain provisions of the banking regulator's KYC or Know Your Customer norms, according to an official statement. 

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

Earlier, the RBI issued a notice to Hinduja Leyland Finance advising it to show cause as to why a penalty should not be imposed on it for its failure to comply with its instructions, based on "supervisory findings of non-compliance with RBI directions and related correspondence" following a statutory inspection of the company conducted by it. 

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

"The company did not put into use a robust software to throw alerts when the transactions were inconsistent with risk categorization and updated profile of the customers, as part of effective identification and reporting of suspicious transactions," the RBI said. 

The banking regulator said its action is "based on deficiency 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 imposition of this monetary penalty is without prejudice to any other action that may be initiated by the RBI against the company, the regulator noted. 

Catch all the latest stock market updates here. For all other news related to business, market, tech and auto, visit Zeebiz.com.