The Reserve Financial institution of India on Friday imposed a penalty of Rs 10 crore on HDFC Financial institution as a consequence of deficiencies in regulatory compliance. The case pertains to advertising and sale of third-party non-financial merchandise together with auto mortgage to financial institution prospects. The regulator stated penalty was primarily based on deficiencies in regulatory compliance and was not supposed to pronounce upon the validity of any transaction or settlement entered into by the financial institution with its prospects.
“RBI has imposed, by an order dated Might 27, 2021, a financial penalty of Rs 10 crore on HDFC Financial institution Restricted (the financial institution) for contravention of provisions of Part 6(2) and Part 8 of the Banking Regulation Act, 1949 (the Act),” RBI stated.
It stated a discover was issued to the financial institution advising it to indicate trigger as to why penalty shouldn’t be imposed for contravention of the provisions of the act/instructions. “An examination of paperwork within the matter of promoting and sale of third-party non-financial merchandise to the financial institution’s prospects, arising from a whistle blower grievance to RBI concerning irregularities within the auto mortgage portfolio of the financial institution, revealed contravention of the aforesaid provisions of the act and the regulatory instructions, ” RBI stated.
The regulator has imposed penalty after contemplating the financial institution’s reply to the showcause discover, oral submissions made throughout the private listening to and examination of additional clarifications/paperwork furnished by the lender.
The irregularities within the auto mortgage portfolio pertains to the fees that the financial institution’s executives had compelled the debtors to purchase GPS gadgets bundled with the auto loans.