Recorded RBI impact
Fine: Rs 10.0 L
Monetary penalty · Fresh imposition
Published by RBI
19 Apr 2024
Case Brief
By an order dated April 15, 2024, RBI imposed a monetary penalty on NABFINS Limited, Bengaluru, a subsidiary of NABARD, for non-compliance with certain provisions of the NBFC-Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016. Following a statutory inspection, supervisory findings, a show-cause notice, and consideration of the company's reply and submissions, RBI sustained the charge that NABFINS had forced customers to choose only a particular insurance company in relation to assets financed by it. RBI said the penalty was imposed under section 58G read with section 58B(5)(aa) of the RBI Act, 1934 and that the action is without prejudice to any other action that may be initiated.
Why RBI Acted
RBI imposed a monetary penalty after a statutory inspection found non-compliance with certain provisions of the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016. The sustained charge was that the company adopted a restrictive practice of forcing customers to go only for a particular insurance company in respect of assets financed by it, which warranted the penalty under section 58G read with section 58B(5)(aa) of the RBI Act, 1934.
Operating Impact
NABFINS must absorb the ₹10 lakh penalty and address the compliance weaknesses identified by RBI. The order does not itself bar business activity, but it signals continued supervisory exposure and the possibility of further regulatory action.
Regulatory Basis
- clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58 B of the Reserve Bank of India Act, 1934
Action Facts
- Primary Impact
- Fine: Rs 10.0 L
- Order Date
- 15 Apr 2024
- Effective From
- 15 Apr 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC