RBI Crackdown: Heavy Penalties Imposed on Four NBFCs for Regulatory Violations

RBI Takes Strict Action Against Four NBFCs for Non-Compliance

The Reserve Bank of India (RBI) has imposed financial penalties totaling Rs 76.60 lakh on four Non-Banking Financial Companies (NBFCs) for violating regulatory guidelines. The penalized entities include Rang De P2P Financial Services, Faircent Technologies India Private Limited (Faircent), Visionary Financepeer Private Limited, and Bridge Fintech Solutions Private Limited (Finzy). These companies failed to comply with the provisions of the Non-Banking Financial Companies (NBFCs) directions, prompting action from the central bank.

RBI’s Official Statement on the Penalties

RBI announced that a monetary penalty of Rs 10 lakh has been imposed on Rang De P2P Financial Services Ltd for disbursing loans to individual borrowers without obtaining specific approval from individual lenders. Similarly, FairAssets Technologies India Pvt Ltd (Faircent) has been fined Rs 40 lakh for multiple violations, including:

• Disbursing loans without the explicit approval of individual lenders

• Failing to disclose the credit assessment and risk profile of borrowers to potential lenders

• Assuming partial credit risk by waiving management fees

Additional Regulatory Breaches

RBI highlighted that Faircent also failed to comply with its 'fund transfer mechanism' guidelines. Instead of ensuring repayments from specific borrowers to their respective lenders, the company allowed repayments using fresh funds from new or existing lenders, as well as collections from other borrowers.

Penalties on Visionary Financepeer and Finzy

• Visionary Financepeer Private Limited was fined Rs 16.60 lakh for non-compliance with RBI’s 2017 guidelines on Peer-to-Peer (P2P) lending platforms. The company was found to have:

  • Disbursed loans without lenders' explicit approval

  • Failed to ensure loan agreements were signed between lenders and borrowers

  • Withheld key borrower details from lenders

  • Operated without a board-approved policy for pricing services

  • Entered into agreements with service providers without clauses recognizing RBI’s inspection rights

  • Assumed partial credit risk, which is not allowed under NBFC-P2P regulations

• Bridge Fintech Solutions Private Limited (Finzy) was penalized Rs 10 lakh for violating several provisions under RBI’s NBFC-P2P guidelines.

Conclusion

RBI’s decisive action reinforces its commitment to maintaining transparency and compliance in the financial sector. These penalties serve as a warning to NBFCs, emphasizing the need to strictly adhere to regulatory norms to ensure fair and responsible lending practices.