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Berar Finance Limited

NBFCNagpur, Maharashtra

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

Fine: Rs 10.5 L

Monetary penalty · Fresh imposition

S3

Published by RBI

8 Dec 2023

Case Brief

The Reserve Bank of India imposed a monetary penalty on Berar Finance Limited, Nagpur by order dated December 07, 2023. The penalty was for non-compliance with certain provisions of the RBI’s Know Your Customer Directions, 2016. RBI’s inspection found that the company had not set up a system for periodic review of risk categorisation of accounts and had not put robust software in place for effective identification and reporting of suspicious transactions. RBI issued a show-cause notice, considered the company’s reply and submissions, and then confirmed that the contraventions were substantiated. The penalty was imposed under section 58G read with section 58B(5)(aa) of the RBI Act, 1934.

Why RBI Acted

KYC / AMLReporting & disclosure

RBI imposed a monetary penalty on Berar Finance Limited, Nagpur for non-compliance with certain provisions of the Reserve Bank of India (Know Your Customer) Directions, 2016. In the statutory inspection, RBI found that the company did not put in place a system for periodic review of risk categorisation of accounts and did not use robust software for effective identification and reporting of suspicious transactions. After considering the company’s reply, additional submissions, and oral submissions at the personal hearing, RBI concluded that the charge was substantiated and warranted penalty under section 58G read with section 58B(5)(aa) of the RBI Act, 1934.

Operating Impact

The company must absorb the monetary penalty and strengthen its KYC/AML controls, especially periodic account-risk review and suspicious transaction monitoring/reporting. There is no stated restriction on operations, but the compliance deficiencies highlighted by RBI may invite closer supervisory scrutiny going forward.

Regulatory Basis

  • Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016
  • clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58 B of the Reserve Bank of India Act, 1934

Action Facts

Primary Impact
Fine: Rs 10.5 L
Order Date
7 Dec 2023
Effective From
7 Dec 2023
Entities Affected
1
Entity Role
Primary
Entity Type
NBFC