RBI imposes penalty on Mahindra & Mahindra Financial Services, Indian Bank

The Reserve Bank has imposed a penalty of Rs 6.77 crore on Mahindra & Mahindra Financial Services Ltd, Mumbai, for non-compliance with norms related to disclosure of interest rates to borrowers at the time of sanction of loans, a release said on Thursday.

In another release, the RBI said a Rs 55 lakh penalty has been imposed on Indian Bank for contravention of certain Know Your Customer (KYC)) norms.

A penalty of Rs 10.50 lakh on Muthoot Money Limited, Ernakulam for non-compliance with certain provisions of the ‘Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016’, has also been imposed.

Also Read | RBI proposes expanding UPI digital payments system to allow credit

The RBI said the penalties are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by them with customers.

The RBI said the statutory inspection of Mahindra & Mahindra Financial Services was conducted with reference to its financial position as on March 31, 2019, and March 31, 2020.

RBI said it was revealed, inter alia, non-compliance by the company with the directions on fair practices relating to disclosure of annualised rate of interest charged on loans to the borrowers at the time of sanction and failure to give notice of change in terms and conditions of loan to its borrowers.

The Reserve Bank carried out scrutiny of the Indian Bank in July 2020 based on a high-value fraud reported by the bank.