Non-compliance with norms: RBI imposes Rs 8.8L penalty on PFC

Mumbai: The Reserve Bank of India imposed a ban a penalty of Rs 8.8 lakh on Power Finance Corporation (PFC) Limited on the grounds of non-compliance with certain provisions of directions on 'Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies', PTI reported.

The statutory inspection of the company was conducted by RBI with reference to its financial position as of March 31, 2022.

PFC had not maintained the prescribed Liquidity Coverage Ratio (LCR) of 60 per cent as of March 31, 2022, as a result of the inclusion of ineligible assets as High-Quality Liquid Assets (HQLA) for the computation of the LCR, Reserve Bank said.

"Consequently, 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 RBI directions, as stated therein," it said.

After considering the company's reply to the notice, examination of additional submissions made by it and oral submissions made during the personal hearing, RBI said it came to the conclusion that the charge of non-compliance was substantiated and warranted imposition of monetary penalty.

The central bank, however, said the penalty is based on the 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.