Sunday, April 16, 2017

RBI imposes Monetary Penalty of Rs5 lacs on M/s Hinduja Leyland Finance Ltd

              Reserve Bank of India vida a Press Release informed to public at large regarding imposing a monetary penalty of ₹5 lakh on M/s Hinduja Leyland Finance Ltd. (the company).

The monetary penalty was for violation of directions/orders issued by Reserve Bank of India from time to time.

Reserve Bank of India officials inspected books and accounts of the company as on March 31, 2015 between December 30, 2015 and January 14, 2016.

RBI officials observed that the company process of charging interest and its communication to the borrower was done in non-transparent manner which was in violation of the Fair Practices Code guidelines issued by the Bank under Section 45 L of the RBI Act, 1934.

Accordingly, the company was issued a Show Cause Notice (SCN) on July 29, 2016 for imposition of penalty. The company’s response to the SCN was not found to be satisfactory. The company was also accorded a personal hearing by RBI on February 22, 2017.

After considering the facts of the case and the company’s reply, as also, personal submissions made during the hearing, RBI came to the conclusion that the violations as observed during scrutiny were substantiated which warranted imposition of monetary penalty on the company. Accordingly, a penalty of ₹5 lakh has been imposed on the company.

The complete Fair Practice Code of  Hinduja Leyland Finance Ltd can be read here.

Hinduja Leyland Finance Ltd (HLF) was incorporated on November 12, 2008. HLF is one of India's leading vehicle finance NBFCs  with a focus on urban and semi-urban markets.

HLF though its vast network of branches, finances a wide range of commercial and personal vehicles, which include medium and heavy commercial vehicles (“MHCVs”), light commercial vehicles (“LCVs”), small commercial vehicles (“SCVs”), cars, multi-utility vehicles, three wheelers, and two wheelers, as well as various kinds of used vehicles.

HLF also finance tractors and construction equipment, and provide loans against property (“LAP”). In September 2015, HLF received a certificate to commence housing finance business through their  wholly owned subsidiary, Hinduja Housing Finance Limited, which focuses on providing finance for affordable housing loans.

The promoters of HLF are Ashok Leyland Limited (“ALL”) and Hinduja Power Limited. HLF leverages the relationship with ALL¸ which is the second largest carrier in the MHCV segment in India (Source: IAI Report, 2015).

HLF through preferred financier arrangements with various motor vehicle OEMs provides vehicle finance products to their customer base.

Apart from financing normal vehicles, HLF speciality is financing ‘Construction Equipment Finance’. HLF offers finances to :-
1.  Earth Moving Equipments
2.  Road Construction Equipments
3.  Concrete Equipments
4.  Other machines