The RBI explained that, based on supervisory findings of non-compliance with its directions and related correspondence, the companies were issued notices. They were asked to show cause as to why a penalty should not be imposed for their failure to comply with the RBI?s guidelines.

In the case of Aadhar Housing Finance Limited, the RBI noted that the company had charged interest on loans for a period before the actual disbursement of the loan or issuance of the cheque to certain borrowers, which was in violation of the RBI's 'Fair Practices Code.' As for the Housing and Urban Development Corporation Limited, the penalty was imposed due to the company's failure to conduct risk categorisation of its customers during the financial year 2021-22, lack of a system for periodic review of risk categorisation, and failure to create a floating charge on its assets, as required under Section 29B of the NHB Act, in favour of its depositors, and register it with the Registrar of Companies.