On 6-4-2023, the Reserve Bank of India (‘RBI’) imposed monetary penalty of Rs. 6.77 crores on Mahindra & Mahindra Financial Services Ltd., Mumbai for non-compliance with the Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.
Background:
RBI conducted a statutory inspection of the company with respect to its financial position on 31-3-2019 and 31-3-2020. After the examination of the Risk Assessment Report, Inspection Reports and all related correspondence pertaining to the same revealed, inter-alia, non-compliance by the company.
Non-Compliance:
The Company did not comply with the RBI directions on fair practices relating to disclosure of annualized rate of interest charged on loans to the borrowers at the time of sanction.
The Company also failed to give notice of changes in terms and conditions of loan to its borrowers, when it charged a higher rate of interest than what was communicated at the time of sanction.
