RBI concluded that the charge of non-compliance with the instructions was substantiated and justified the imposition of a monetary penalty.
The Reserve Bank of India (RBI) on Tuesday imposed a monetary sanction of Rs 2.50 million on Bajaj Finance for using coercive recovery methods from its borrowers and for violating general guidelines and a specific direction issued by the regulator. . The central bank found the consumer financier guilty of violating the risk management instructions and code of conduct in the outsourcing of financial services by non-bank financial companies (NBFC) and the code of fair practice (FPC) for Applicable NBFC. Furthermore, Bajaj Finance was also found to have violated a specific instruction to ensure full compliance with the FPC in letter and spirit.
“This sanction has been imposed in exercise of the powers conferred on RBI under the provisions of clause (b) of subsection (1) of section 58 G read with clause (aa) of subsection (5) of section 58B of The Reserve Bank of India Act 1934, taking into account the fact that the company failed to ensure that its recovery agents did not resort to harassment or intimidation of clients as part of their collection efforts of debts and, therefore, did not comply with the aforementioned instructions issued by RBI. “The regulator said in a statement on its website. There were also persistent and repeated complaints about the recovery and collection methods adopted by Bajaj Finance, the RBI said.
For the above lapses, a notice was issued to the company advising it to demonstrate the cause of why a penalty should not be imposed for such non-compliance. After considering the company’s response to the notification, the oral presentations made during the personal hearing, and the examination of the additional submissions made by the company, the RBI concluded that the charge of non-compliance with the instructions was substantiated and justified the imposition of a monetary fine. “This action is based on deficiencies in regulatory compliance and does not seek to rule on the validity of any transaction or agreement entered into by the company with its clients,” said the regulator.
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