The Reserve Bank of India (RBI) has charged the Non-Banking Finance Company (NBFC) L&T Finance with Rs 2.50 crore for failing to adhere to certain regulatory provisions regarding interest rates.
The statutory inspection of the company was conducted by the RBI with reference to its financial position as of March 31, 2021, and March 31, 2022.
As per the examination of the Risk Assessment Reports, Inspection Reports, Supervisory Letters, and all related correspondence, the RBI found that the NBFC had not disclosed to its retail borrowers the gradation of risk and rationale for charging different interest rates to different categories of borrowers in the loan application form or sanction letter.
It also failed to notify the change in the penal interest rate to its borrowers whenever it charged higher rates than what was communicated at the time of sanction. Additionally, it failed to give notice of change in the terms and conditions of loans to its borrowers when the NBFC charged an annualised rate of interest, which was higher than what was communicated at the time of sanction.
The RBI had also issued a show-cause notice as to why a penalty should not be imposed on the company for failing to comply with its norms.
First Published: Oct 20 2023 | 9:44 PM IST