RBI slaps Rs 2.5 crore fine on Bajaj Finance for violating recovery practices

The Reserve Bank of India on Tuesday said it has imposed a penalty of Rs 2.5 crore on Bajaj Finance Limited, a part of Bajaj Group, for breaching regulatory norms pertaining to recovery and collection methods. The monetary penalty has been imposed as the non-banking financial company (NBFC) has been failed to ensure that its recovery agents did not resort to harassment or intimidation of customers as part of its debt collection efforts, the apex bank said.

"The RBI has imposed a monetary penalty of Rs 2.50 crore on Bajaj Finance Limited, Pune, by an order dated January 05, 2021, for violation of (i) directions issued by RBI on Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs and Fair Practices Code (FPC) for applicable NBFCs, contained in the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016; and (ii) a specific direction to the company to ensure full compliance with FPC in letter and spirit," the central bank notified.

The central bank said that the penalty has been imposed as the company failed to adhere to the aforesaid directions issued by the RBI. There were also repeated complaints about recovery and collection methods adopted by the company, it added.

The RBI had issued show cause for the above lapses, asking the company to explain why penalty should not be imposed for such non-compliance. "After considering the company's reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI concluded that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty," it said.

The RBI further stated that 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.

By Chitranjan Kumar

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