Recorded RBI impact
Fine: Rs 3.50 L
Monetary penalty · Fresh imposition
Published by RBI
6 Sept 2024
Case Brief
By an order dated September 2, 2024, RBI imposed a monetary penalty on Housing and Urban Development Corporation Limited after finding non-compliance with certain provisions of the RBI KYC Direction, 2016 and the Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021. The violations included failure to risk-categorize customers and periodically review that categorization, as well as failure to create and register a floating charge on assets invested in favour of depositors under Section 29B of the NHB Act. The penalty was imposed under Section 52A of the National Housing Bank Act, 1987 following supervisory inspection, notice, reply, and personal hearing.
Why RBI Acted
RBI imposed a monetary penalty under Section 52A of the National Housing Bank Act, 1987 after supervisory inspection and a show-cause process. The company was found to have failed to undertake risk categorization of customers during FY 2021-22 and to put in place a system for periodic review of risk categorisation of accounts, and also failed to create a floating charge on assets invested by it in favour of its depositors and register it with the Registrar of Companies, contrary to the RBI KYC Direction, 2016 and the Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021.
Operating Impact
The company must bear the penalty and remain exposed to any further action RBI may initiate separately. The release does not impose an operating ban, but it records compliance failures that may attract additional supervisory scrutiny for the company and affect depositor protection-related obligations.
Regulatory Basis
- Section 52A of the National Housing Bank Act, 1987
- Reserve Bank of India (Know Your Customer (KYC)) Direction, 2016
- Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021
- Section 29B of NHB Act
Action Facts
- Primary Impact
- Fine: Rs 3.50 L
- Order Date
- 2 Sept 2024
- Effective From
- 2 Sept 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC