Multiple choice

Is breach of RBI directives a punishable offence and to what extent?

  1. Yes, a fine up to Rs. 5 lakh and for continuation of the offence, a fine of up to Rs. 10,000 per day.

  2. Yes, by cancellation of licences of the company.

  3. No, these are the administrative directions.

  4. No, the Act has not provided for any punishment in specific.
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A Correct answer
Explanation

Under Section 12 of the SARFAESI Act, the Reserve Bank of India is statutorily empowered to issue directions to the securitisation or reconstruction company. If any such company fails to comply with any of the directions issued by the Reserve Bank of India, then such company is punishable with a fine not exceeding Rs. 5 lakh for the default. In case of further continuation of the offence, an additional fine up to Rs. 10,000 per day of the default can be imposed.

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