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RBI in action mode, registration certificate of two NBFCs cancelled

Sagar Patel

By Sagar Patel

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Shaktikanta Das, RBI Governor

The Reserve Bank of India has now come into action. On one hand, the RBI is imposing fines on the banks for negligence. On the other hand, even the registration certificates of the non-banking financial companies have been cancelled. The RBI has taken major action against two such companies and cancelled the registration certificate. The companies were not following the RBI guidelines. So, action has been taken against the companies. Let us also tell you which are those two companies against which the RBI has taken action.

Action against these companies

RBI has taken major action against non-banking financial companies i.e. NBFC Star Finserv India Limited and Polytex India Limited. RBI cancelled the registration certificates of both the NBFCs. According to RBI, both the companies were indulging in irregular lending practices. So, the Certificate of Registration i.e. COR issued to these non-banking financial companies was cancelled. This action by RBI is considered quite big. Also, an attempt has been made to convey a message that if any NBFC does anything like this, strictest action will be taken against it.

Companies did not follow the guidelines.

According to the RBI, the allegation against Star Finserv India Limited is that the company has ignored the RBI guidelines on the code of conduct in outsourcing of financial services in its digital lending operation. According to this allegation, the company outsourced key decision-making functions such as credit assessment, loan sanctioning and KYC verification process to a service provider.

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Apart from this, the company has violated RBI guidelines on customer data privacy and security by providing customer data to the service provider. Also, the company has not followed RBI guidelines by not providing copies of loan agreement and sanction letter in vernacular language to its customers. On the other hand, regarding Polytex India Limited, RBI said that the company has not followed the guidelines on customer engagement, know your customer i.e. KYC verification, loan disbursement, loan recovery.

Sagar Patel

Sagar Patel

I am Sagar Patel, specializing in business news reporting. With a keen focus on economic trends, market analysis, and corporate developments,

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