The Reserve Bank of India (RBI) announced on April 5 that it has imposed a monetary penalty of Rs 49.70 lakh on LIC Housing Finance for violating rules.
According to the RBI press release, LIC Housing Finance failed to adhere to certain provisions of the ‘Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021’. Specifically, the company did not disclose the rate of interest, risk gradation approach, and rationale for charging varying interest rates to different borrower categories in loan application forms and sanction letters.
Additionally, the central bank noted that LIC Housing Finance imposed pre-payment penalties on housing loans based on both floating and fixed rates, which were closed prematurely from any source and from borrowers’ own sources, respectively.
The RBI clarified that this penalty is a result of regulatory compliance shortcomings and does not imply judgment on the validity of any transactions or agreements between the company and its customers.
