In exercise of the powers conferred under Section 45-IA (6) of the Reserve Bank of India Act, 1934, the Reserve Bank has cancelled the Certificate of Registration (CoR) issued to the Non-Banking Financial Company (NBFC), Polytex India Ltd.
The CoR has been cancelled by RBI as:
The company has violated RBI guidelines on code of conduct in outsourcing of financial services by outsourcing its core decision-making functions related to client sourcing, Know Your Customer (KYC) verification, credit appraisal, loan disbursal, loan recovery, follow up with borrowers and attending and resolving complaints from borrowers.
While outsourcing the activities related to lending, the company earned a fixed fee from its service provider, whereas the service provider earned the interest charged on the borrower on these loans and in some cases at exorbitant rates in violation of Fair Practice Code (FPC) Guidelines issued by RBI.
