Recorded RBI impact
Fine: Rs 1.70 L
Monetary penalty · Fresh imposition
Published by RBI
16 Oct 2023
Case Brief
By an order dated September 15, 2023, RBI imposed a monetary penalty of Rs 1.70 lakh on West End Housing Finance Limited, Mumbai, Maharashtra. The penalty was imposed for non-compliance with NHB directions on approval of acquisition or transfer of control and RBI directions applicable to NBFC-HFCs. RBI noted that the company’s annual report for FY2020-21 revealed failure to obtain prior written permission for changes in shareholding, causing shareholding to be transferred beyond the permitted limit. After reviewing the company’s reply and oral submissions, RBI held the contravention substantiated and imposed the penalty under the National Housing Bank Act, 1987.
Why RBI Acted
RBI imposed a monetary penalty under Section 52A of the National Housing Bank Act, 1987 for non-compliance with NHB directions on 'Housing Finance Companies – Approval of Acquisition or Transfer of Control (NHB) Directions 2016' and RBI direction on 'Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021'. The company’s FY2020-21 annual report showed failure to obtain prior written permission of NHB/RBI for change in shareholding due to progressive increases over time, leading to transfer of shareholding beyond the permitted limit. RBI concluded the non-compliance was substantiated after considering the company’s reply and oral submissions.
Operating Impact
The company must absorb the monetary penalty; the release does not indicate any suspension, restriction on operations, or other ongoing operational condition. The finding is limited to past non-compliance and does not itself invalidate customer transactions or agreements.
Regulatory Basis
- clause (b) of sub-section (1) of Section 52A read with clause (aa) of sub-section (3) of Section 49 of the National Housing Bank Act, 1987
Action Facts
- Primary Impact
- Fine: Rs 1.70 L
- Order Date
- 15 Sept 2023
- Effective From
- 15 Sept 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC