The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹15 lakh on Fedbank Financial Services Ltd (Fedfina), Mumbai, for non-compliance with certain provisions of the central bank’s directions on monitoring of frauds.
“This penalty has been imposed in exercise of powers vested in RBI under the provisions of …the Reserve Bank of India Act, 1934.
“This action is based on deficiencies in regulatory compliance, and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers,” said the RBI in a statement.
Fedfina is a subsidiary of Federal Bank. The bank has 74 per cent stake in the non-banking finance company (NBFC).
The central bank observed that the statutory inspection of the company, with reference to its financial position as on March 31, 2019, revealed, inter alia, non-compliance with certain provisions of the directions issued by the Reserve Bank of India contained in ‘Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016’.
In furtherance to the same, a notice was issued to the company advising it to show cause as to why penalty should not be imposed for failure to comply with the directions issued by RBI, the statement said.
After considering the company’s reply to the notice and oral submissions made during the personal hearing, the RBI came to the conclusion that the charge of non-compliance with aforesaid RBI directions was substantiated and warranted imposition of monetary penalty, the RBI added.