Shubham Saroj
The Reserve Bank of India (RBI) has imposed a fine of Rs 2.5 crores on Bajaj Finance for violating RBI’s directions on fair practices code (FPC) and also for outsourcing of financial services by a non-banking financial company.
The fine is basically due to the techniques adopted by the recovery agents to collect money. The recovery agents often use ways that are impolite, rude and cruel. The penalty is imposed at a time when law enforcement authorities are cracking down on app-based lenders that harass the borrowers which has led to suicide in a couple of cases.
Bajaj Finance is the largest Non Banking Financial Company (NBFC) in the consumer segment. While most of these entities are not regulated by the central bank, its ruling on a regulated entity like Bajaj Finance is expected to make others cautious as well, acting as a deterrent.
“This penalty has been imposed in exercise of powers vested in RBI under the provisions of clause (b) of sub-section (1) of section 58G 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,” it said.
The RBI had issued show cause for the above lapses, asking the company to explain why penalty should not be imposed for such non-compliance. “After considering the company’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI concluded that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty,” it said.
A piece of advice for you – don’t take loans if you’re not capable to return them and only take loans when you actually need them. Don’t take a loan just because a customer care executive called you and said that you’re eligible for a loan of “xyz” amount. Educate yourself financially as much as possible.
