Five Star Business Finance Limited

RBI imposed a monetary penalty under Section 58G(1)(b) read with Section 58B(5)(aa) of the RBI Act, 1934, following a statutory inspection of the company as on March 31, 2025. RBI found sustained charges of non-compliance with provisions of the Reserve Bank of India (Know Your Customer (KYC)) Directions and directions on the Fair Practice Code: the company failed to put in place robust software for effective identification and reporting of suspicious transactions, and failed to disclose the approach for gradation of risk and the rationale for charging different interest rates to different categories of borrowers in application forms and sanction letters.

The penalty itself is a financial sanction and does not state any immediate business restriction. Five Star Business Finance Limited remains subject to RBI oversight and may face additional action in future, while the cited compliance weaknesses imply ongoing obligations to strengthen KYC/suspicious transaction monitoring and improve transparency in pricing disclosures to borrowers.