RBI imposes monetary penalty on Belstar Microfinance Limited, Chennai
Case Brief
RBI imposed a monetary penalty on Belstar Microfinance Limited by order dated May 9, 2024. The action followed a statutory inspection and supervisory findings that the company had outsourced decision-making functions for determining compliance with KYC norms to certain outsourced agents, contrary to the RBI (Know Your Customer (KYC)) Direction, 2016. RBI said the penalty was imposed under section 58G(1)(b) read with section 58B(5)(aa) of the RBI Act, 1934.
Following a statutory inspection with reference to the company's financial position as on March 31, 2022, RBI found that Belstar Microfinance Limited had outsourced decision-making functions for determining compliance with KYC norms to certain outsourced agents. RBI concluded that this amounted to non-compliance with certain provisions of the RBI (Know Your Customer (KYC)) Direction, 2016 and imposed a monetary penalty under section 58G(1)(b) read with section 58B(5)(aa) of the RBI Act, 1934.
Severity Assessment
This is a monetary penalty of Rs 3.10 lakh, which falls in the lowest monetary severity band and has no broader operational restriction.
Belstar Microfinance Limited must pay the monetary penalty of Rs 3.10 lakh. The penalty does not itself bar the company from operating, but it records a compliance breach under RBI’s KYC framework and leaves RBI free to initiate any further action if warranted.
Published as Belstar Microfinance Limited
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