Recorded RBI impact
Fine: Rs 2.50 L
Monetary penalty · Fresh imposition
Published by RBI
11 Mar 2022
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹2.50 lakh on M.L. Securities and Finance Private Limited, Indore (M.P.), an NBFC, by order dated March 11, 2022. RBI said the company failed to comply with certain provisions of the directions on classification of non-performing assets contained in the Non-Banking Financial Company - Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016. The penalty was imposed under section 58G read with section 58B(5)(aa) of the RBI Act, 1934, after an inspection-based show-cause process and consideration of the company’s replies and oral submissions.
Why RBI Acted
RBI imposed a monetary penalty on M.L. Securities and Finance Private Limited, Indore, for non-compliance with certain provisions of the directions issued by RBI on classification of non-performing assets contained in the 'Non-Banking Financial Company - Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016'. RBI stated that the action was based on deficiencies in regulatory compliance and that the inspection report (based on financial position as on March 31, 2019) revealed the non-compliance; after a show-cause notice, replies, and oral submissions, RBI concluded the charge was substantiated and warranted penalty under section 58G read with section 58B(5)(aa) of the RBI Act, 1934.
Operating Impact
The company must absorb the monetary penalty; the release does not impose any new operational restriction or cancellation. No forward-looking limits on business activity are described, though the finding highlights a regulatory compliance lapse that may affect supervisory scrutiny.
Regulatory Basis
- 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
Action Facts
- Primary Impact
- Fine: Rs 2.50 L
- Order Date
- 11 Mar 2022
- Effective From
- 11 Mar 2022
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC