By an order dated 03-09-2024, the Reserve Bank of India (‘RBI’) imposed a penalty of Rs. 10,40,000/- on Hewlett Packard Financial Services (India) Pvt. Ltd. (‘HP Financial Services’) for non-compliance with certain provisions of the ‘RBI Know Your Customer (KYC) Directions, 2016’, ‘Non-Banking Financial Company — Systematically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’ and Master Directions for ‘Information Technology Framework for the NBFC Sector’ issued by RBI.
Background
RBI conducted a statutory inspection of HP Financial Services regarding its financial position on 31-03-2022. Based on this, a show cause notice was issued to HP Financial Services as to why a penalty should not be imposed on it for its failure to comply with the said directions.
After considering its reply, RBI found that the following charges against HP Financial Services were sustained:
-
HP Financial Services failed to put in place a periodic review of risk categorization of accounts;
-
HP Financial Services failed to disclose and explicitly communicate the rate of interest and the approach for gradations of risk and rationale for charging different rates of interest from different categories of borrowers in the loan application form and the sanction letter;
-
HP Financial Services failed to form an IT Strategy Committee and an IT Steering Committee.
RBI further clarified that the action taken was based on regulatory compliance deficiencies and was unrelated to any transaction or agreement that HP Financial Services may have entered into.