RBI Penalizes Mahindra & Mahindra Financial Services Ltd, Indian Bank And Muthoot Money Limited

The Reserve Bank of India (RBI) has penalised Mahindra & Mahindra Financial Services Ltd, located in Mumbai, Indian Bank, and Muthoot Money Limited situated at Ernakulam, for non-compliance with various regulations as per Times now reporting.

According to the report in RBI's release on Thursday, Mahindra & Mahindra Financial Services is fined Rs 6.77 crore for non disclosure of interest rates to borrowers while sanctioning loans. Indian Bank was penalised with Rs 55 lakh for contravening certain KYC norms and Muthoot Money Limited got fined Rs 10.50 lakh for non-compliance with fraud monitoring provisions.

The fines imposed were for regulatory compliance deficiencies and intended at the validity of any transaction or agreement between the financial entities and their customers.

When RBI conducted a statutory inspection against Mahindra & Mahindra Financial Services with reference to its financial position as of March 31, 2019, and March 31, 2020. The central bank discovered instances of the company's violation of regulations regarding transparent practices with regards to loans.

While Mahindra & Mahindra Financial Services specifically failed to disclose annualized interest rates charged to borrowers while approving loans and also did not inform borrowers about the changes made to the terms and conditions of their loans.

The RBI imposed the penalty on Indian Bank after observing the bank's failure to comply with certain KYC norms. It was scrutinised based on a high-value fraud report.

Muthoot Money Limited was penalized for its failure to comply with the provisions related to monitoring frauds in NBFCs directions, as laid out by the RBI in 2016. The direction mandated the reporting of all frauds, the establishment of an online fraud monitoring mechanism, and the creation of a framework for the exchange of fraud-related information between NBFCs.