The penalty has been imposed on Mahindra Finance for non-compliance with “non-banking financial company - systemically important non-deposit taking company and deposit taking company (Reserve Bank) directions, 2016” issued by RBI.

The statutory inspection of the company was conducted by RBI with reference to its financial position on 31 March 2019, and 31 March 2020.

In a statement, RBI said, “An examination of the risk assessment report, inspection reports and all related correspondence has revealed, non-compliance by the company with the RBI directions on fair practices relating to disclosure of annualised rate of interest charged on loans to the borrowers at the time of sanction and failure to give notice of change in terms and conditions of loan to its borrowers, when it charged higher rate of interest than what was communicated at the time of sanction, during financial years 2018-19, 2019-20 and 2020-21.”

After considering the company's reply to the notice, oral submissions made during the personal hearing and on examination of additional submissions made by it, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty, the central bank stated.

Mahindra finance said that it has already implemented necessary steps for compliance with the RBI directions. The firm will also be taking necessary steps to comply with the said order as directed, it added.

Mahindra & Mahindra Financial Services (Mahindra Finance), part of the Mahindra Group, is one of India's leading non-banking finance companies. Focused on the rural and semi-urban sector, the company has over 8.7 million customers and has an AUM of over $11 Billion. The company is a leading vehicle and tractor financier, provides loans to SMEs and also offers fixed deposits.

The NBFC reported 30% drop in standalone net profit to Rs 629 crore in Q3 FY23 from Rs 894 crore in Q3 FY22. Total Income in the third quarter was at Rs 2,892 crore, up 14% YoY.

Shares of Mahindra & Mahindra Financial Services jumped 5.30% to close at Rs 252.30 on Thursday, 6 April 2023.

The domestic stock market is shut today, 7 April 2023, on account of Good Friday.