The Reserve Bank of India (RBI) announced on Friday that it has imposed a penalty of Rs 5 lakh each on KKR India Financial Services Limited, Mumbai and Daimler Financial Services India Private Limited, Pune for violating certain directions issued by the central bank.
It has fined both KKR India Financial Services and Daimler Financial Services for failing to comply with the 'Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016' issued by RBI.
"This penalty has been imposed in exercise of powers vested in RBI under the provisions of clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58 B of the Reserve Bank of India Act, 1934, taking into account the failure of the company to adhere to the aforesaid RBI Directions," noted RBI in an official statement.
RBI explained that it had conducted a statutory inspection of both the firms with reference to its financial position as on March 31, 2020. It added that the examination of the Risk Assessment Report and report of the statutory inspection and all related correspondence pertaining to the same, revealed, inter alia, non-compliance with the above-mentioned directions to the extent of delay in reporting fraud to RBI through FMR-1 through a DO letter in the case of KKR India Financial Services.
The central bank then issued a notice to the firms advising them to show cause as to why a penalty should not be imposed on them for failure to comply with the RBI directions.
After considering the companies' reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty.
"This action is based on the 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," added RBI.
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