RBI imposes penalties on Godrej Housing, HUDCO, and Aadhar Housing Finance

The RBI fined Godrej Housing Finance, Aadhar Housing Finance, and HUDCO for non-compliance with housing finance regulations. Godrej Housing failed to obtain required valuation reports, Aadhar charged interest before loan disbursement, and HUDCO neglected risk categorization.

Piyush Shukla Published On September 10th, 2024

The Reserve Bank of India (RBI) has levied penalties on three Non-Banking Financial Companies (NBFCs) for failing to comply with its directives on housing finance companies. The penalties are as follows: Godrej Housing Finance Limited and Aadhar Housing Finance Limited were each fined Rs 5 lakh, while Housing and Urban Development Corporation Limited (HUDCO) faced a penalty of Rs 3.5 lakh.

These fines, imposed under Section 52A of the National Housing Bank Act, 1987, followed inspections by the National Housing Bank (NHB) based on the companies’ financial positions as of March 31, 2022. Despite the companies’ responses to the notices issued by RBI, the regulator determined that they had breached specific guidelines and imposed penalties accordingly.

Godrej Housing Finance Limited

Failed to obtain two independent valuation reports before sanctioning loans of Rs 75 lakh and above.

Aadhar Housing Finance Limited

Charged interest on loans before the actual disbursement of the loan, violating RBI’s ‘Fair Practices Code.’

Housing and Urban Development Corporation Limited (HUDCO)

Failed to conduct customer risk categorization for FY 2021-22, lacked periodic review of account risk categories, and did not create and register a floating charge on depositor assets as required by Section 29B of the NHB Act.