The Reserve Bank of India (RBI) on 5th January 2021 levied a monetary penalty of Rs 2.50 crore on Bajaj Finance Limited for the violation of rules concerning recovery and collection methods.
Bajaj Finance share price fell intraday on 6th January 2021 after RBI’s imposed penalty on the company for breach of risk management and outsourcing rules.
The RBI’s statement said, “This penalty has been imposed in exercise of powers vested in RBI under the provisions of clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58B 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 RBI. There were also persistent/repeat complaints about recovery and collection methods adopted by the company.”
The central bank also said that Bajaj Finance violated a “specific direction to the company to ensure full compliance with FPC in letter and spirit.”
The RBI sent a notice to the company with details and advise to show cause as to why the penalty should be imposed for violation of RBI’s directions on fair practices code (FPC) and outsourcing of financial services by a non-banking financial company. The regulator said, “After considering the company’s reply to the notice, oral submissions were 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 RBI regulator continued to say, “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.”
Bajaj Finance was quoting at Rs 5,077.70, down Rs 41.30, or 0.81% on the BSE. The share landed its 52-week high of Rs 5,372.75 and a 52-week low of Rs 1,783.10 on 31st December 2021 and 27th May 2020, respectively.
The non-banking financial company (NBFC) reported assets under management (AUM) of Rs 1.04 lakh crore on 30th September 2020.
As of now, it is trading 5.49% below its 52-week high and 184.77% above its 52-week low.