The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹10 lakh on Mercedes-Benz Financial Services India Private Limited, Pune, Maharashtra (formerly known as Daimler Financial Services India Private Limited).
This penalty was levied due to the company’s non-compliance with specific provisions outlined in the Reserve Bank of India’s Know Your Customer (KYC) Direction of 2016. The RBI exercised its authority under the provisions of clause (b) of sub-section (1) of Section 58G, in conjunction with clause (aa) of sub-section (5) of Section 58B of the Reserve Bank of India Act, 1934, to impose this penalty.
The enforcement action taken by the RBI was predicated on identified deficiencies in regulatory compliance and should not be construed as an assessment of the validity of any transactions or agreements entered into by the company with its customers.
The RBI conducted a statutory inspection of Mercedes-Benz Financial Services India with reference to its financial standing as of March 31, 2021. During this inspection, a thorough examination of the Risk Assessment Report, Inspection Report, Supervisory Letter, and all related correspondence revealed, among other things, that the company failed to conduct ongoing due diligence on its customers. Specifically, it had not undertaken the necessary periodic updating of KYC for its high-risk customers as of March 31, 2021.
Subsequently, the RBI issued a notice to the company, prompting it to provide a justification as to why a penalty should not be imposed for its failure to adhere to the RBI’s directives. The company responded to this notice and provided additional submissions, which were considered by the RBI. Moreover, the RBI conducted a personal hearing during which the company made oral submissions.
After a thorough assessment of the company’s responses, additional submissions, and oral arguments, the RBI determined that the charge of non-compliance with the aforementioned RBI directives was substantiated. Consequently, the RBI found it necessary to impose a monetary penalty as a consequence of this non-compliance.
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