BBN Bureau
Non-compliance with RBI’s KYC norms during an NCD issue
KOCHI/February 08-2022: The Thrissur-headquartered non-banking financial institution (NBFC), Pooram Finserv Pvt Ltd (picture shown is representative), has been fined Rs10 lakh on February 4 for non-adherence with certain provisions of Know-Your-Customer (KYC) with regard to a non-convertible debentures (NCDs) issue in 2015.
Pooram Finserv was incorporated in 1993 in Thrissur, the ‘financial capital’ of Kerala, and currently. The company’s paid-up capital is Rs10.26 crore and has an authorised capital of Rs15 crore, accor,ding to details gleaned by businessbenchmark.news
RBI said in its statement that it has imposed the monetary penalty on Pooram Finserv for ”failing to comply with certain provisions of the RBI Master Direction – Know Your Customer (KYC) Direction, 2016, dated February 25, 2016, and the RBI Direction on raising money through private placement of non-convertible debentures (NCDs) by the by NBFC, dated February 20, 2015.
“This penalty has been imposed in exercise of powers vested in RBI under section 45JA and the provisions of clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58B of the RBI Act, 1934, taking into account the failure of the company to adhere to the said directions issued by RBI,” the regulator explained.
RBI further clarified that this action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers.
Background
The scrutiny of the operations of Pooram Finserv was conducted in January 2019 and the scrutiny report, revealed, inter alia, the non-compliance with the respective directions issued by RBI.
Subsequently, a notice was issued to the company advising it to show-cause as to why penalty should not be imposed for failure to comply with the directions issued by RBI.
After considering the company’s reply to the notice and examination of additional submissions made by it, RBI came to the conclusion that the charge of non-compliance with aforesaid RBI directions was substantiated and warranted imposition of monetary penalty.
