RBI Slaps Rs7.10 Lakh Penalty on Sundaram Home Finance, Belstar Microfinance and Vaijapur Merchants Cooperative Bank
Moneylife Digital Team 16 May 2024
The Reserve Bank of India (RBI) has imposed a total penalty of Rs7.10 lakh on Sundaram Home Finance Ltd, Belstar Microfinance Ltd and The Vaijapur Merchants Cooperative Bank Ltd for failing to follow directions issued by the banking regulator on know your customer (KYC) and sanctioning fresh hypothecation loan beyond revised exposure limit.
In three separate releases, RBI says it imposed a penalty of Rs1.50 lakh on Sundaram Home Finance for non-compliance with certain provisions of KYC directions. "The company did not carry out periodic updation of KYC of certain customers within the prescribed periodicity," RBI says.
Similarly, RBI slapped a penalty of Rs3.10 lakh on Chennai-based Belstar Microfinance for non-compliance with certain provisions on KYC. During its statutory inspection, RBI found that  Belstar Microfinance has outsourced decision-making functions of determining compliance with KYC norms to certain outsourced agents. 
Vaijapur, Maharashtra-based Vaijapur Merchants Cooperative Bank was slapped with a penalty of Rs2.50 lakh for sanctioning fresh hypothecation loans beyond the revised exposure limit in violation of specific directions issued by RBI under the supervisory action framework (SAF).  
RBI clarified that its action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company or lender with their customers. Further, the imposition of this monetary penalty is without prejudice to any other action that RBI may initiate against these entities.
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