RBI imposes Rs 8.8 lakh penalty on Power Finance Corporation for non-compliance
PFC had not maintained the prescribed Liquidity Coverage Ratio (LCR) of 60 per cent as of March 31, 2022, as a result of the inclusion of ineligible assets as High-Quality Liquid Assets (HQLA) for the computation of the LCR, Reserve Bank said.
The Reserve Bank of India (RBI) on Tuesday said it has imposed a penalty of Rs 8.8 lakh on Power Finance Corporation (PFC) Limited for non-compliance with certain provisions of directions on ‘Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies'.
The statutory inspection of the company was conducted by RBI with reference to its financial position as of March 31, 2022.
PFC had not maintained the prescribed Liquidity Coverage Ratio (LCR) of 60 per cent as of March 31, 2022, as a result of the inclusion of ineligible assets as High-Quality Liquid Assets (HQLA) for the computation of the LCR, Reserve Bank said.
The Reserve Bank of India (RBI) on Tuesday imposed a penalty of Rs 8.8 lakh on Power Finance Corporation (PFC) Limited for failing to comply with certain provisions of the 'Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies'. The RBI conducted a statutory inspection of the company based on its financial position as of March 31, 2022.
According to the Reserve Bank, PFC did not maintain the prescribed Liquidity Coverage Ratio (LCR) of 60 per cent as of March 31, 2022, due to the inclusion of ineligible assets as High-Quality Liquid Assets (HQLA) in the LCR computation process.
The central bank added, "Consequently, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the RBI directions, as stated therein."
The RBI stated that it concluded that the charge of non-compliance was substantiated and warranted the imposition of a monetary penalty after considering the company's response to the notice, examination of additional submissions made by it, and oral submissions made during the personal hearing.
However, the central bank stated that the penalty is based on deficiencies in regulatory compliance and is not intended to rule on the validity of any transaction or agreement entered into by the company with its customers.
(With Agency Inputs)
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