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RBI imposes penalty of Rs 5 lakh on LIC Housing Finance

The Reserve Bank of India (RBI) on Monday informed that it has imposed a monetary penalty of Rs 5 lakh on LIC Housing Finance Limited. The central bank said that the statutory inspection of the housing finance company revealed its failure to create a floating charge in favour of its depositors on a portion of the assets invested by it in terms of section 29B of NHB (National Housing Bank) Act, and non-registration of such charge with the Registrar of Companies.

A notice was issued to the company advising it to show cause as to why a penalty should not be imposed on it for failure to comply with the statutory directions. After considering the company’s reply to the notice, examination of additional submissions made by it, and oral submissions made during the personal hearing, the RBI came to the conclusion that the charge of non-compliance was substantiated and warranted the imposition of monetary penalty.

The bank regulator said this action was based on the deficiencies in regulatory compliance and was not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers.

Rs 5 lakh fine on Mysore Merchants Co-operative Bank Ltd

Besides LIC Housing, Karnataka’s Mysore Merchants Co-operative Bank has been fined Rs 5 lakh for violation of directions issued under Management of Advances-UCBs (Urban Co-operative Banks). The penalty was slapped after the RBI found instances of sanction of gold loans in breach of the cap under the bullet repayment scheme. 

Rs 2 lakh penalty on City Co-operative Bank Ltd, Mysore

The RBI also imposed a monetary penalty of Rs 2 lakh on The City Co-operative Bank Ltd, Mysore for non-adherence to directions issued under Management of Advances-UCBs. The bank regulator said that the inspection report of the cooperative bank based on its financial position as on March 31, 2020, revealed instances of sanction of gold loans in breach of the cap under the bullet repayment scheme.  

 

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