In a significant development, the Reserve Bank of India (RBI) announced on Friday that it has imposed a monetary penalty of Rs 5 lakh on Bajaj Housing Finance for violating regulatory provisions related to changes in management and directorship.
The central bank’s action comes after inspections revealed that the housing finance company failed to obtain prior written permission from the RBI for a change in management, resulting in a shift of more than 30 percent of the directors, excluding independent directors. This failure to comply with regulatory directives prompted the RBI to take disciplinary action against Bajaj Housing Finance.
The RBI had earlier issued a notice to the company, calling for an explanation as to why a penalty should not be imposed for its failure to adhere to regulatory directives. Following the company’s response to the notice, the central bank concluded that the charges of non-compliance were substantiated, justifying the imposition of the monetary penalty.
The penalty is based on an assessment conducted by the National Housing Bank for the period ending on March 31, 2022. According to the RBI’s press release, the violation pertains to certain provisions of the ‘Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021.’
“The company did not take prior written permission of the RBI for a change in management resulting in a change in more than 30 percent of the directors, excluding independent directors,” the press release stated.
The penalty order, dated January 29, 2024, emphasizes the importance of adherence to regulatory guidelines and procedures. Bajaj Housing Finance is expected to comply with the penalty order and take corrective measures to rectify the non-compliance issues.
Despite this regulatory setback, Bajaj Housing Finance reported a notable financial performance in the October-December quarter. The company’s net profit witnessed a robust growth of 31 percent year-on-year, reaching Rs 437 crore, driven by an increase in Assets Under Management (AUM) and net interest income.
As of December 31, 2023, the AUM surged by 31 percent to Rs 85,929 crore compared to the same period in the previous year. Net interest income also registered a healthy increase of 17 percent in Q3FY24, amounting to Rs 645 crore.
Gross NPA (Non-Performing Assets) and Net NPA as of December 31, 2023, stood at 0.25 percent and 0.10 percent, respectively, showing marginal changes from the previous year. Despite the penalty, Bajaj Housing Finance remains focused on sustaining its financial growth and reinforcing its compliance framework.
