The Reserve Bank of India (RBI) on Monday, October 31, imposed a monetary penalty of Rs 5 lakh on LIC Housing Finance Ltd for non-compliance with certain provisions of National Housing Bank (NHB).
The non-banking finance company has not compliant with certain provisions of “The Housing Finance Companies (NHB) Directions, 2010” issued by the NHB on July 02, 2018.
After examination and evaluation, it was revealed that LIC Housing Finance failed to create floating charge in favour of its depositors on a portion of the assets invested by it in terms of section 29B of NHB Act, and non-registration of such charge with the Registrar of Companies.
In furtherance to the same, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the statutory directions, as stated therein.
After considering the reply of LIC Housing Finance 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.
“This penalty has been imposed in exercise of powers vested in RBI under the provisions of clause (b) of sub-section (1) of section 52A read with clause (aa) of sub-section (3) of section 49 of the National Housing Bank Act, 1987 (NHB Act),” the RBI said in a release.
RBI, however, clarified in the statements that the penalties are not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers.
RBI conducted the statutory inspection of the housing finance company, conducted by NHB with reference to its financial position as on March 31, 2020 and examination of the Inspection Report, supervisory letter and all related correspondence pertaining to the same.
(The writer is CEO, Track2Realty)
