Recorded RBI impact
Fine: Rs 25,000
Monetary penalty · Fresh imposition
Published by RBI
2 Sept 2024
Case Brief
RBI imposed a monetary penalty on RAR Fincare Limited, Chennai, Tamil Nadu, for non-compliance with certain provisions of its NBFC directions, including the Master Direction for non-systemically important non-deposit taking companies and the Master Direction on Scale Based Regulation. RBI found that the company did not obtain prior written permission before a change in management that led to more than 30% of its directors, excluding independent directors, being changed. The penalty was levied under the RBI Act, 1934, following a show-cause process and personal hearing. RBI also clarified that the penalty does not pronounce on the validity of any customer transaction or agreement and is without prejudice to any other action that may be initiated.
Why RBI Acted
RBI imposed a monetary penalty after supervisory findings and correspondence showed non-compliance with the Master Direction on NBFCs and the Master Direction on Scale Based Regulation. The company failed to take prior written permission of RBI before effecting a change in management that resulted in a change of more than 30% of its directors, excluding independent directors. The penalty was imposed under section 58G(1)(b) read with section 58B(5)(aa) of the RBI Act, 1934.
Operating Impact
RAR Fincare Limited must absorb the monetary penalty and remain compliant with RBI directions on change in management for any future director or control changes. The order does not itself restrict operations, but further supervisory or enforcement action remains possible if compliance issues continue.
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 25,000
- Order Date
- 28 Aug 2024
- Effective From
- 28 Aug 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC