RBI Imposes Rs13.50 Lakh Penalty on 3 Housing Finance Companies, Including Godrej Housing Finance
Moneylife Digital Team 09 September 2024
Reserve Bank of India (RBI) has imposed penalties worth Rs13.50 lakh on three housing finance companies (HFCs) for non-compliance with the directions issued by the banking regulator. The HFCs penalised by RBI are Godrej Housing Finance Ltd, Aadhar Housing Finance Ltd and Housing and Urban Development Corporation Ltd (HUDCO).
 
Godrej Housing Finance and Aadhar Housing Finance have been penalised Rs5 lakh each, while HUDCO was penalised Rs3.50 lakh. 
 
Godrej Housing Finance and Aadhar Housing Finance are penalised for non-compliance with certain provisions of the non-banking financial company (NBFC) - HFC Reserve Bank directions.
 
RBI's statutory inspection found that Godrej Housing Finance failed to obtain two independent valuation reports before sanctioning certain loans of Rs75 lakh and above. 
 
Aadhar Housing Finance charged interest on loans for a period before the actual disbursement of loans or issuance of cheques to some borrowers in contravention of RBI directions on 'fair practices code'.
 
Further, HUDCO was fined for non-compliance with directions issued on know-your-customer (KYC) and NBFCs-HFCs.
 
RBI discovered that HUDCO failed to categorise its customers' risk during FY21-22. Additionally, it did not establish a system for periodic reviews of customer risk categories. Furthermore, HUDCO did not create a floating charge on the assets it had invested, as required by Section 29B of the National Housing Bank (NHB) Act, which should have been done in favour of its depositors and registered with the registrar of companies (RoC).
 
In all three cases, RBI said penalties are based on deficiencies in regulatory compliance and are not intended to pronounce on the validity of any transaction or agreement they entered into with their customers.
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