Recorded RBI impact
Fine: Rs 42.5 L
Monetary penalty · Fresh imposition
Published by RBI
3 Feb 2023
Case Brief
RBI, by order dated February 1, 2023, imposed a monetary penalty of Rs 42.48 lakh on Krazybee Services Private Limited, Bangalore. Following a statutory inspection, RBI found the company had not ensured that its recovery agents refrained from harassing or intimidating customers during debt collection, and it also noted persistent complaints regarding the company’s recovery and collection methods. The penalty was imposed for non-compliance with RBI directions on Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs and Fair Practices Code for applicable NBFCs, under the relevant provisions of the RBI Act, 1934.
Why RBI Acted
RBI imposed a monetary penalty under section 58G read with section 58B(5)(aa) of the RBI Act, 1934 after a statutory inspection found non-compliance with RBI directions on 'Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs' and 'Fair Practices Code for applicable NBFCs' contained in the Non-Banking Financial Company Directions, 2016. The company was found to have failed to ensure that its recovery agents avoided harassment or intimidation of customers, and RBI noted persistent/repeat complaints about customer harassment linked to the company’s recovery and collection practices.
Operating Impact
Krazybee Services Private Limited must absorb the financial penalty and address the supervisory concerns identified by RBI. The action does not invalidate customer transactions, but it signals that the company’s collection and recovery practices must be brought in line with RBI directions to avoid further supervisory action.
Regulatory Basis
- clause (b) of sub-section (1) of section 58 G
- clause (aa) of sub-section (5) of section 58 B of the Reserve Bank of India Act, 1934
Action Facts
- Primary Impact
- Fine: Rs 42.5 L
- Order Date
- 1 Feb 2023
- Effective From
- 1 Feb 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC