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RBI fines LIC Housing Finance for failing to comply with National Housing Bank requirements

New Delhi: In response to LIC Housing Finance Ltd.’s failure to comply with some National Housing Bank requirements, the Reserve Bank of India (RBI) fined the company Rs. 5 lakh on October 31. (NHB).

Certain requirements of “The Housing Finance Companies (NHB) Directions, 2010,” released by the NHB on July 2, 2018, have not been followed by the non-banking finance business.

“This penalty has been imposed in exercise of powers vested in RBI under the provisions of clause (b) of sub-section (1) of section 52A read with clause (aa) of sub-section (3) of section 49 of the National Housing Bank Act, 1987 (NHB Act),” the RBI said in a release.

In its pronouncements, RBI made it clear that the fines are not meant to question the legality of any agreements or transactions the company has with its clients.

In accordance with the home financing firm’s financial situation as of March 31, 2020, and after carefully reviewing the Inspection Report, the Supervisory Letter, and all pertinent correspondence, RBI conducted the statutory inspection of the company. This inspection was carried out by NHB.

Examination and evaluation found that, in violation of section 29B of the NHB Act, LIC Housing Finance failed to establish a floating charge in favour of its depositors on a portion of the assets invested by it, and that the charge was not registered with the Registrar of Companies. A notice was sent to the corporation in furtherance of that, asking it to provide justification as to why a fine should not be placed on it for failing to follow the instructions set forth in the notice.

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