{"id":330933,"date":"2024-09-17T16:00:03","date_gmt":"2024-09-17T10:30:03","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=330933"},"modified":"2024-09-19T15:55:46","modified_gmt":"2024-09-19T10:25:46","slug":"rbi-imposes-penalty-10-4-lakhs-hp-financial-services-failing-to-comply-rbi-directions-kyc-nbfc-it-framework-nbfc-sector","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2024\/09\/17\/rbi-imposes-penalty-10-4-lakhs-hp-financial-services-failing-to-comply-rbi-directions-kyc-nbfc-it-framework-nbfc-sector\/","title":{"rendered":"RBI imposes penalty of Rs. 10.4 lakhs on HP Financial Services for failing to adhere to its KYC, NBFC, and IT framework regulations for the non-banking financial sector"},"content":{"rendered":"
\n

By an order dated 03-09-2024, the Reserve Bank of India (‘RBI’) imposed a penalty of Rs. 10,40,000\/- on Hewlett Packard Financial Services (India) Pvt. Ltd. (‘HP Financial Services’) for non-compliance with certain provisions of the ‘RBI Know Your Customer (KYC) Directions, 2016<\/a>’, ‘Non-Banking Financial Company — Systematically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016<\/a>’ and Master Directions for ‘Information Technology Framework for the NBFC Sector<\/a>’ issued by RBI.<\/p>\n

Background<\/p>\n

RBI conducted a statutory inspection of HP Financial Services regarding its financial position on 31-03-2022. Based on this, a show cause notice was issued to HP Financial Services as to why a penalty should not be imposed on it for its failure to comply with the said directions.<\/p>\n

After considering its reply, RBI found that the following charges against HP Financial Services were sustained:<\/p>\n

    \n
  1. \n

    HP Financial Services failed to put in place a periodic review of risk categorization of accounts;<\/p>\n<\/li>\n

  2. \n

    HP Financial Services failed to disclose and explicitly communicate the rate of interest and the approach for gradations of risk and rationale for charging different rates of interest from different categories of borrowers in the loan application form and the sanction letter;<\/p>\n<\/li>\n

  3. \n

    HP Financial Services failed to form an IT Strategy Committee and an IT Steering Committee.<\/p>\n<\/li>\n<\/ol>\n

    RBI further clarified that the action taken was based on regulatory compliance deficiencies and was unrelated to any transaction or agreement that HP Financial Services may have entered into.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    HP Financial Services not only failed to establish a periodic review of risk categorization of accounts but also failed to form an IT Strategy Committee as well as an IT Steering Committee.<\/p>\n","protected":false},"author":67011,"featured_media":323058,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4,1193],"tags":[73197,73196,73198,46417,34616,2945,2611,58686],"class_list":["post-330933","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legislationupdates","category-notifications","tag-10-4-lakhs","tag-hp-financial-services","tag-it-framework-for-nbfc-sector","tag-kyc","tag-monetary-penalty","tag-NBFC","tag-RBI","tag-rbi-directions"],"yoast_head":"\nRBI imposes penalty of Rs. 10.4 lakhs on HP Financial Services for failing to comply with RBI Directions for KYC, NBFCs, and IT Framework for NBFC Sector | 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Background: RBI conducted a statutory inspection\u2026","rel":"","context":"In "Legislation Updates"","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"RBI","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/02\/MicrosoftTeams-image-498.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/02\/MicrosoftTeams-image-498.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/02\/MicrosoftTeams-image-498.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/02\/MicrosoftTeams-image-498.png?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":225081,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/02\/03\/penalty-imposed-on-fortune-integrated-assets-finance-ltd-for-non-compliance-of-monitoring-of-frauds-in-nbfcs-reserve-bank-directions-2016\/","url_meta":{"origin":330933,"position":2},"title":"Penalty on — Fortune Integrated Assets Finance Ltd. for non-compliance of– Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016","author":"Bhumika Indulia","date":"February 3, 2020","format":false,"excerpt":"The Reserve Bank of India (RBI) has imposed, by an order dated January 31, 2020, a monetary penalty of Rs 2 lakh on Fortune Integrated Assets Finance Ltd., Mumbai, for non-compliance with directions issued by RBI on \u2018Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016\u2019. The penalty has been\u2026","rel":"","context":"In "Hot Off The Press"","block_context":{"text":"Hot Off The Press","link":"https:\/\/www.scconline.com\/blog\/post\/category\/news\/hot_off_the_press\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":265084,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/04\/06\/rbi-notifies-net-owned-fund-for-nbfcs-to-commence-business\/","url_meta":{"origin":330933,"position":3},"title":"RBI notifies net owned fund for NBFCs to commence business","author":"Bhumika Indulia","date":"April 6, 2022","format":false,"excerpt":"The Reserve Bank of India has specified ten crore rupees as net owned fund (NOF) required for following categories of non- banking financial companies to commence or carry on the business of non-banking financial institution from October 01, 2022: (a) Non-banking financial company \u2013 Investment and Credit Company (NBFC-ICC); (b)\u2026","rel":"","context":"In "Legislation Updates"","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/04\/MicrosoftTeams-image-147.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/04\/MicrosoftTeams-image-147.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/04\/MicrosoftTeams-image-147.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/04\/MicrosoftTeams-image-147.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/04\/MicrosoftTeams-image-147.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":257142,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/11\/16\/rbi-introduces-internal-ombudsman-mechanism-for-select-non-banking-financial-companies-nbfcs\/","url_meta":{"origin":330933,"position":4},"title":"RBI introduces internal ombudsman mechanism for select Non-Banking Financial Companies (NBFCs)","author":"Bhumika Indulia","date":"November 16, 2021","format":false,"excerpt":"On November 15, 2021, the Reserve Bank has directed Deposit-taking NBFCs (NBFCs-D) with 10 or more branches and Non-Deposit taking NBFCs (NBFCs-ND) with asset size of Rs.5,000 crore and above having public customer interface to appoint Internal Ombudsman (IO) at the apex of their internal grievance redress mechanism within a\u2026","rel":"","context":"In "Legislation Updates"","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/rbi_2.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/rbi_2.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/rbi_2.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/rbi_2.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/rbi_2.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":250479,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/06\/30\/rbi-issues-guidelines-on-declaration-of-dividends-by-nbfcs\/","url_meta":{"origin":330933,"position":5},"title":"RBI issues guidelines on declaration of dividends by NBFCs","author":"Prachi Bhardwaj","date":"June 30, 2021","format":false,"excerpt":"The Reserve Bank of India has issued circular dated June 24, 2021 prescribing the guidelines on distribution of dividend by NBFC\u2019s. The guidelines shall be applicable to all NBFCs regulated by RBI and shall be effective for declaration of dividend from the profits of the financial year ending March 31,\u2026","rel":"","context":"In "Legislation Updates"","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/330933","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/67011"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=330933"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/330933\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/323058"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=330933"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=330933"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=330933"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}