Recorded RBI impact
Fine: Rs 50,000
Monetary penalty · Fresh imposition
Published by RBI
9 Jan 2025
Case Brief
The Reserve Bank of India imposed a monetary penalty on Indian School Finance Company Pvt. Ltd., Telangana, by order dated January 03, 2025. RBI said the company had not complied with certain directions on 'Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs', and specifically found that it outsourced its core management function of Internal Audit to an external auditor. The penalty was imposed under Section 58G(1)(b) read with Section 58B(5)(aa) of the RBI Act, 1934, following a statutory inspection and show-cause proceedings.
Why RBI Acted
RBI imposed a monetary penalty after a statutory inspection and supervisory proceedings found non-compliance with RBI directions on 'Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs'. The sustained charge was that the company outsourced one of its core management functions, Internal Audit, to an external auditor, contrary to the applicable directions. The penalty was imposed under Section 58G(1)(b) read with Section 58B(5)(aa) of the RBI Act, 1934.
Operating Impact
The company must absorb the penalty and remains subject to RBI supervisory scrutiny. The order does not invalidate customer transactions, but it signals compliance deficiencies and leaves open the possibility of further action by RBI.
Regulatory Basis
- Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934
Action Facts
- Primary Impact
- Fine: Rs 50,000
- Order Date
- 3 Jan 2025
- Effective From
- 3 Jan 2025
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC