RBI Imposes Penalties on Housing Finance Companies for Non-Compliance
Shillong, September 6: The Reserve Bank of India (RBI) has levied monetary penalties on Godrej Housing Finance Ltd, Aadhar Housing Finance Ltd, and Housing and Urban Development Corporation Ltd for failing to comply with regulatory norms.
Godrej Housing Finance and Aadhar Housing Finance have each been fined Rs 5 lakh, while Housing and Urban Development Corporation has been penalized Rs 3.5 lakh. The RBI exercised its authority under Section 52A of the National Housing Bank Act, 1987, to impose these fines.
An inspection of Godrej Housing Finance, conducted by the National Housing Bank with reference to its financial status as of March 31, 2022, revealed compliance breaches. Specifically, the company did not obtain two independent valuation reports before sanctioning loans of Rs 75 lakh and above. Despite receiving a notice and responding to it, the RBI determined that the violation warranted a monetary penalty.
Aadhar Housing Finance was found to have charged interest on loans for periods before the actual disbursement or issuance of cheques to borrowers, contrary to the RBI’s ‘Fair Practices Code.’
Similarly, Housing and Urban Development Corporation failed to conduct risk categorization of its customers during the financial year 2021-22. Moreover, it did not implement a system for periodic risk review of accounts, create a floating charge on invested assets as stipulated by Section 29B of the NHB Act, or register the same with the Registrar of Companies.
These penalties underscore the RBI’s strict enforcement of compliance norms within the housing finance sector, highlighting the importance of adhering to regulatory guidelines to maintain financial stability and trust.
The actions taken by the central bank serve as a reminder to all financial institutions about the critical need for stringent adherence to regulatory requirements to ensure transparency and protect consumer interests.
(IANS)
Original Story https://theshillongtimes.com/2024/09/06/rbi-penalises-3-housing-finances-firms-for-violating-norms/
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