RBI imposes penalty of ₹2.5 crore on Bajaj Finance

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹2.50 crore on Bajaj Finance Ltd (BFL). The central bank, in a statement, said: “The penalty has been imposed on Pune-based BFL for violation of “(i) directions issued by the RBI on Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs and Fair Practices Code (FPC)…and (ii) a specific direction to the company to ensure full compliance with FPC in letter and spirit.”

The statement said this penalty has been imposed in exercise of powers vested in the RBI under the provisions of the Reserve Bank of India Act, 1934, taking into account the failure of the company to ensure that its recovery agents did not resort to harassment or intimidation of customers as part of its debt collection efforts and, thereby, failing to adhere to the aforesaid directions issued by the RBI.

There were also persistent/repeat complaints about recovery and collection methods adopted by the company, it added.

“For the above lapses, a notice was issued to the company advising it to show cause as to why penalty should not be imposed for such non-compliance.

“After considering the company’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, the RBI concluded that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty,” the central bank said.

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

The central bank had imposed a monetary penalty of ₹1 crore by a January 3, 2019, order for violation of FPC.