The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹33.10 lakh on IIFL Samasta Finance Limited for non-compliance with regulatory provisions. The violations pertain to RBI’s Non-Banking Financial Company (NBFC) Directions, 2016, and Know Your Customer (KYC) Directions, 2016.
Reasons for the Penalty
RBI conducted a statutory inspection of IIFL Samasta Finance based on its financial position as of March 31, 2023. During this assessment, several violations of regulatory guidelines were identified, leading to the issuance of a show-cause notice to the company. After reviewing the company’s response and hearing additional submissions, RBI found that multiple breaches had occurred, justifying the penalty.
Key Violations by IIFL Samasta Finance
RBI identified the following regulatory lapses:
- Charging Interest Before Loan Disbursement:
- The company imposed interest charges on loans before actual disbursement or cheque issuance, violating RBI’s Fair Practices Code.
- Incorrect Classification of NPAs:
- Certain loan accounts with overdues of 90 days or more were not classified as Non-Performing Assets (NPAs) as required by RBI norms.
- Misclassification of NPA Accounts as Standard Assets:
- Some accounts that should have been categorized as NPAs were instead listed as standard assets without full realization of the overdue principal and interest.
- Failure to Maintain Unique Customer Identification Codes (UCIC):
- The company allotted multiple customer identification codes to the same customers instead of issuing a Unique Customer Identification Code (UCIC) for each individual.
RBI’s Stance and Further Actions
RBI has clarified that this penalty is based on regulatory deficiencies and does not affect the validity of any transaction between the company and its customers. Furthermore, this action does not preclude RBI from taking additional measures against IIFL Samasta Finance in the future.
Conclusion
This regulatory action reinforces the importance of strict compliance with RBI guidelines for NBFCs and financial institutions. Companies must ensure fair lending practices, accurate NPA classification, and proper customer identification to avoid penalties and maintain trust in the financial system.
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