Recorded RBI impact
Fine: Rs 8.80 L
Monetary penalty · Fresh imposition
Published by RBI
6 Feb 2024
Case Brief
RBI, by order dated February 6, 2024, imposed a monetary penalty of ₹8.80 lakh on Power Finance Corporation Limited, New Delhi. The penalty was imposed for non-compliance with RBI’s directions on the Liquidity Risk Management Framework for NBFCs and CICs. During statutory inspection, RBI found that the company had not maintained the prescribed Liquidity Coverage Ratio of 60% as on March 31, 2022 because ineligible assets were included as High Quality Liquid Assets for the computation of the ratio. After notice, reply, additional submissions, and oral hearing, RBI concluded that the non-compliance was substantiated and warranted penalty under the RBI Act.
Why RBI Acted
RBI imposed a monetary penalty under section 58G read with section 58B of the RBI Act, 1934 after a statutory inspection found that Power Finance Corporation Limited had not maintained the prescribed Liquidity Coverage Ratio (LCR) of 60% as on March 31, 2022. The deficiency arose because ineligible assets were included as High Quality Liquid Assets (HQLA) for LCR computation, amounting to non-compliance with RBI’s directions on the Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies.
Operating Impact
The company must absorb the monetary penalty and address the liquidity-risk compliance gap identified by RBI, including ensuring future LCR calculations exclude ineligible assets from HQLA. The action does not itself impose a business restriction, but it signals supervisory scrutiny over the company’s liquidity compliance framework.
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 8.80 L
- Order Date
- 6 Feb 2024
- Effective From
- 6 Feb 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC