The Reserve Bank (RBI) has imposed a penalty of Rs 1 crore on IDFC First Bank and Rs 49.70 lakh on LIC Housing Finance. The central bank said that both these financial institutions have ignored the rules. IDFC First Bank has been fined for giving infrastructure loan to a government company in 2016 and 2017. Let us know the complete news.
The Reserve Bank (RBI) has imposed a penalty of Rs 1 crore on IDFC First Bank and Rs 49.70 lakh on LIC Housing Finance. The central bank said that both these financial institutions have ignored the rules.
Why was the fine imposed?
RBI said in a statement that it has imposed the penalty on private sector IDFC First Bank for giving infrastructure loan to a government company in 2016 and 2017. In this, the instructions of the Central Bank on ‘Loans and Advances – Statutory and Other Restrictions’ were not followed.
RBI examined the financial position of the bank as on March 31, 2022. It was revealed that the bank did not follow the guidelines. In such a situation, RBI issued a notice to the bank and after not being satisfied with the reply, imposed a fine.
At the same time, the penalty on LIC Housing Finance has been imposed due to non-compliance of some provisions of RBI’s ‘Non-Banking Finance Companies – Housing Finance Company (Reserve Bank) Guidelines, 2021’.
Will customers be affected?
Action has been taken against both the financial institutions for not following the rules properly. In such a situation, it will not have any effect on any transaction or agreement with the customers. Apart from imposing fine, if RBI takes any action against both the institutions, it will not have any impact on the interests of the customers.
Four NBFCs also fell under attack
RBI has also canceled the Certificate of Registration (CoR) of four NBFCs – Kundals Motor Finance, Nitya Finance, Bhatia Higher Purchase and Jeevanjyoti Deposits and Advances. These four companies can no longer do any business as non-banking financial institutions.
At the same time, five other NBFCs have surrendered their CoR. These are Growing Opportunity Finance (India), Invel Commercial, Mohan Finance, Saraswati Properties and Quikr Marketing.
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