The Reserve Bank of India (RBI) announced on Friday that it had imposed a fine of Rs 5 lakh each on KKR India Financial Services Limited, Mumbai and Daimler Financial Services India Private Limited, Pune for breaching certain instructions issued by the central bank .
It fined both KKR India Financial Services and Daimler Financial Services for failing to comply with the ‘NBFC (Reserve Bank) Fraud Monitoring 2016’ guidelines issued by RBI.
“This sanction has been imposed in the exercise of the powers granted to RBI under the provisions of subparagraph (b) of subsection (1) of Article 58 G read together with subparagraph (aa) of the subsection (5) of Section 58 B of the Reserve Bank of India Act, 1934, taking into account that the company has not adhered to the above-mentioned RBI guidelines,” the RBI noted in a statement. official.
RBI explained that it had carried out a legal inspection of the two companies with reference to its financial situation as of March 31, 2020. It added that the review of the risk assessment report and the report of the legal inspection and all related correspondence regarding the same, disclosed, among others, non-compliance with the above instructions in the extent of delay in reporting the fraud to RBI via FMR-1 via DO letter in the case of KKR India Financial Services .
The central bank then issued a notice to companies advising them to justify why a sanction should not be imposed on them for failing to comply with the RBI’s instructions.
After reviewing the Companies’ response to the Notice and the oral submissions made at the Personal Hearing, RBI has concluded that RBI’s allegation of non-compliance with the above-noted instructions is well-founded and warrants the imposition of a pecuniary penalty.
“This action is based on deficiencies in regulatory compliance and is not intended to rule on the validity of any transaction or agreement the company has entered into with its customers,” RBI added.
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