The Reserve Bank of India (RBI) fined Muthoot Vehicle & Asset Finance Limited Rs 7.90 lakh for not adhering to liquidity risk management and other regulatory requirements. The penalty was imposed on September 11, 2024, following a statutory review of the company's financial status as of March 31, 2022.
The RBI's inspection revealed numerous instances of noncompliance with its directives, specifically the 'Liquidity Risk Management Framework for Non-Banking Financial Companies (NBFCs) and Core Investment Companies' and the 'Non-Banking Financial Company – Systemically Important Non-Deposit Taking Company and Deposit Taking Company (Reserve Bank) Directions, 2016'.
Related News |
Why RBI Imposed Penalties On Axis Bank And HDFC Bank? Check Here
Following these errors, the central bank issued a show-cause notice to Muthoot Vehicle & Asset Finance Limited, asking why a penalty should not be imposed.
According to the RBI's circular, "After considering the company’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found, inter alia, that the following charges against the company were sustained, warranting imposition of monetary penalty.
The company:
did not disclose the information on Liquidity Coverage Ratio on its website;
did not submit data with respect to its gold loan customers to the four Credit Information Companies; and
did not convey in writing the amount of loan sanctioned along with the terms and conditions, in the vernacular language as understood by the vehicle loan borrowers, by means of a sanction letter or otherwise."
Related News |
RBI Imposes Penalties On Housing and Urban Development Corporation, 2 others
The corporation failed to explain the sanctioned loan amounts, terms, and conditions to its auto loan borrowers in a language that they comprehended. This information should have been delivered by a formal sanction letter or another suitable method.
The monetary penalty was levied under the Reserve Bank of India Act of 1934 and the Credit Information Companies (Regulation) Act of 2005.