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M/s Radhakrishna Finance Pvt. Ltd

NBFC

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

Fine: Rs 1.00 L

Monetary penalty · Fresh imposition

S1

Published by RBI

14 Dec 2017

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹1 lakh on M/s Radhakrishna Finance Pvt. Ltd. under Section 58G(1)(b) read with Section 58B(5)(aa) of the RBI Act, 1934. RBI’s scrutiny of the company found that it had violated directions relating to subordinated debt by redeeming subordinated debt without obtaining the Bank’s consent. The release cites para 2(1)(xxvi) of circular DNBR.(PD).CC.No.044/03.10.119/2015-16 dated July 1, 2015 and item (xvii) of para 3 in Chapter II of the Master Directions on Acceptance of PD Directions 2016 dated August 25, 2016. After a show-cause notice and personal hearing, RBI concluded that the violations were substantiated and imposed the penalty.

Why RBI Acted

Lending normsReporting & disclosure

RBI imposed a penalty under Section 58G(1)(b) read with Section 58B(5)(aa) of the RBI Act, 1934 after scrutiny found that the company violated directions on subordinated debt. The company redeemed subordinated debt without obtaining RBI’s consent, contrary to para 2(1)(xxvi) of circular DNBR.(PD).CC.No.044/03.10.119/2015-16 dated July 1, 2015 and item (xvii) of para 3 in Chapter II of the Master Directions on Acceptance of PD Directions 2016 dated August 25, 2016. A show-cause notice was issued and the company’s reply and personal submissions were found unsatisfactory, leading to the monetary penalty.

Operating Impact

The company must absorb the ₹1 lakh penalty; the release does not describe any ongoing business restriction or licence impact. The forward-looking effect is limited to the financial penalty and compliance expectation that the company follow RBI directions on subordinated debt and obtain required consent before redemption.

Regulatory Basis

  • Section 58G(1)(b)
  • Sub-section 5(aa) of section 58B of the RBI Act, 1934
  • section 45N of Reserve Bank of India Act, 1934
  • para 2(1) (xxvi) of the instructions contained in the circular DNBR. (PD).CC.No.044/03.10.119/2015-16 dated July 01, 2015
  • item (xvii) of para 3 in Chapter II of Master Directions on Acceptance of PD Directions 2016 dated August 25, 2016

Action Facts

Primary Impact
Fine: Rs 1.00 L
Order Date
1 Jul 2015
Entities Affected
1
Entity Role
Primary
Entity Type
NBFC