The Reserve Bank of India (RBI) has imposed penalties on Godrej Housing Finance, Aadhar Housing Finance, and HUDCO for non-compliance with regulatory guidelines. Godrej was fined for failing to secure independent valuations on large loans, while Aadhar charged interest before loan disbursement. HUDCO was penalized for lapses in customer risk categorization and asset management practices. These penalties, totaling INR 13.5 lakh, reflect the RBI's efforts to ensure regulatory compliance and uphold financial sector stability.
The Reserve Bank of India (RBI) recently imposed penalties on three major housing finance companies: Godrej Housing Finance Ltd, Aadhar Housing Finance Ltd, and Housing and Urban Development Corporation Ltd (HUDCO). The fines, totaling INR 5 lakh for each of Godrej and Aadhar Housing Finance, and INR 3.5 lakh for HUDCO, were levied due to violations of RBI regulations governing housing finance companies.
The penalties imposed by the regulator are based on the authority granted to the RBI under Section 52A of the National Housing Bank Act, 1987. According to the RBI, the National Housing Bank (NHB) conducted a statutory inspection of these companies, evaluating their financial status as of March 31, 2022.
The RBI indicated that, following supervisory findings of non-compliance with its directions and related correspondence, a notice was issued to the companies. This notice required them to explain why a penalty should not be imposed for their failure to adhere to RBI directives. After reviewing the companies' responses to the notice, their oral presentations during the personal hearing, and additional submissions, the RBI determined that Godrej Housing Finance Limited did not obtain two independent valuation reports before approving loans of INR 75 lakh and above.
For Aadhar Housing Finance Limited, the RBI noted that the company charged interest on loans for periods before the actual disbursement of the loan or issuance of the check to certain borrowers, which was contrary to RBI's 'Fair Practices Code' guidelines.
The penalty imposed on Housing and Urban Development Corporation Limited was due to several issues: the company failed to categorize customer risk during the financial year 2021-22, did not implement a system for the periodic review of account risk categorization, and neglected to create and register a floating charge on the assets it invested, as required under Section 29B of the NHB Act, for the protection of its depositors. (ANI)
The Reserve Bank of India (RBI) has imposed a total of INR 13.5 lakh in penalties on Godrej Housing Finance, Aadhar Housing Finance, and HUDCO for regulatory breaches. Godrej was fined for not securing independent valuations on large loans, Aadhar for charging interest before loan disbursement, and HUDCO for lapses in customer risk categorization and asset management. These penalties highlight the RBI's commitment to enforcing compliance and maintaining stability in the financial sector.
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