RBI Fines Power Finance Corporation for Breach of Norms
IANS 07 February 2024
The Reserve Bank of India (RBI) on Tuesday imposed a penalty of Rs 8.80 lakh on Power Finance Corporation Ltd for breach of norms related to 'Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies'.
The statutory inspection of the company conducted by RBI revealed, inter alia, that the company had not maintained the prescribed liquidity coverage ratio (LCR) of 60% as on 31 March 2022 as a result of inclusion of ineligible assets as high quality liquid assets for the computation of the LCR.
Consequently, a notice was issued to the company advising it to show cause why penalty should not be imposed on it for failure to comply with RBI directions, as stated therein.
After considering the company’s reply to the notice, examination of additional submissions made by it, and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty.
However, RBI said that this action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers.
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