 "RBI imposes Rs 8.80 lakh fine on Power Finance Corp for norm violation")
The Reserve Bank of India (RBI) on Tuesday imposed a monetary fine of Rs 8.80 lakh on the state-owned Power Finance Corporation for contravening Liquidity Coverage Ratio (LCR) norms by including ineligible high-quality liquid assets.
According to a press release by the RBI, PFC did not adhere to specific provisions of the RBI’s directives on ‘Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies’.
The Risk Assessment Report and Inspection Report with reference to the company indicated that it failed to maintain the prescribed LCR of 60 per cent as of March 31, 2022, due to the inclusion of ineligible assets as High-Quality Liquid Assets (HQLA) in the computation of the LCR.
After reviewing the company’s response to the RBI’s show-cause notice, examining additional submissions, and considering oral representations made during a personal hearing, the RBI concluded that the breach of compliance with its directives was established and merited the imposition of a monetary penalty.