By an order dated 11-09-2024, the Reserve Bank of India (‘RBI’) imposed a monetary penalty of Rs. 7,90,000/- on Muthoot Vehicle & Asset Finance Ltd. (‘MVAFL’) for non-compliance with certain provisions of RBI directions on ‘Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies’ and ‘Non-Banking Financial Company — Systematically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’.
Background
A statutory inspection regarding the final position of MVAFL was conducted on 31-03-2022 based on the supervisory findings of which, a show cause notice was issued to MVAFL as to why a penalty should not be imposed on it.
After considering MVAFL’s reply, RBI found that the following charges against the company were sustained:
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MVAFL did not disclose the information regarding Liquidity Coverage Ratio on its website;
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MVAFL did not submit data regarding its gold loan customers to the four Credit Information Companies;
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MVAFL did not convey the amount of loan sanctioned along with the terms and conditions in writing in the vernacular language as understood by the vehicle loan borrowers.
RBI further clarified that the action taken was based on deficiencies in regulatory compliance and was not related to any transaction or agreement entered into by MVAFL with its customers.
