The Reserve Bank (RBI) has imposed a penalty of Rs 1 crore on IDFC First Bank and Rs 49.70 lakh on LIC Housing Finance. The central bank said that both these financial institutions have ignored the rules.
Why Was The Fine Imposed?
RBI said in a statement that it penalized private sector IDFC First Bank for giving an infrastructure loan to a government company in 2016 and 2017. In this case, the Central Bank’s instructions on ‘Loans and Advances—Statutory and Other Restrictions’ were not followed.
RBI examined the bank’s financial position as of March 31, 2022. It was revealed that the bank did not follow the guidelines. In such a situation, RBI issued a notice to the bank and imposed a fine after not being satisfied with the reply.
At the same time, LIC Housing Finance has been penalized for non-compliance with some provisions of RBI’s ‘Non-Banking Finance Companies—Housing Finance Company (Reserve Bank) Guidelines, 2021’.
Will Customers Be Affected?
Both financial institutions have been punished for not following the rules properly. This situation will not affect any transaction or agreement with the customers. Apart from imposing a fine, if RBI takes action against both institutions, it will not impact the customers’ interests.
Four NBFCs Also Fell Under Attack
RBI has also cancelled the Certificate of Registration (CoR) of four NBFCs – Kundals Motor Finance, Nitya Finance, Bhatia Higher Purchase and Jeevanjyoti Deposits and Advances. These four companies can no longer do any business as non-banking financial institutions.
At the same time, five other NBFCs—Growing Opportunity Finance (India), Invel Commercial, Mohan Finance, Saraswati Properties, and Quikr Marketing—have surrendered their CoR.
