Mumbai: On October 13, 2023, Apex Bank issued a press release in which a monetary penalty of Rupees 8.50 lakh was imposed on India’s leading non-banking financial institution “Bajaj Finance Limited”, the background of the penalty was non-compliance with important RBI Direction-related to the monitoring of frauds in NBFCs. The penalty was imposed according to the Reserve Bank of India Act, 1934 provisions.

According to the RBI, Bajaj Finance Limited failed to report certain frauds to the RBI on time.

The above non-compliance was revealed when Apex Bank conducted a statutory inspection of the company with reference to its financial position the previous year and thereafter issued a show-cause notice to Bajaj Finance Limited, at last Apex Bank came to the conclusion that the charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty and passed order on September 28, imposed a monetary penalty of rupees 8.50 lakh.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction entered into by the company with its customers: RBI said in a statement.

NBFCs are expected to adhere to the regulations and directions set forth by the RBI to ensure the smooth functioning of the banking system and protect the interests of customers.

RBI also imposed a monetary penalty of rupees 1 crore on Union Bank of India and rupees 64 lakh on RBL Bank upon the violation of RBI directions