Recorded RBI impact
Fine: Rs 13.6 L
Monetary penalty · Fresh imposition
Published by RBI
13 Mar 2024
Case Brief
RBI imposed a monetary penalty of ₹13.60 lakh on Indostar Capital Finance Limited by order dated February 21, 2024. The company was found non-compliant with the Monitoring of Frauds in NBFCs Directions and certain provisions of the RBI KYC Directions, after a statutory inspection and subsequent show-cause process. RBI’s findings included inadequate software-based alerts for suspicious transaction identification, delayed periodic KYC updation for high-risk customers, and delayed reporting of certain frauds above ₹1 lakh.
Why RBI Acted
After a statutory inspection with reference to the company’s financial position as on March 31, 2022, RBI found that Indostar Capital Finance Limited had failed to use a robust software tool to generate alerts for effective identification and reporting of suspicious transactions, had not carried out periodic updation of KYC for certain high-risk customers due for review, and had delayed reporting of certain frauds above ₹1 lakh to RBI. The penalty was imposed under section 58G(1)(b) read with section 58B(5)(aa) of the RBI Act, 1934, for non-compliance with the Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016 and certain provisions of the RBI (Know Your Customer) Directions, 2016.
Operating Impact
The company must absorb the monetary penalty and continue complying with RBI’s fraud-monitoring and KYC obligations. The order does not itself restrict operations, but it signals supervisory concerns and may be followed by further regulatory action if deficiencies persist.
Regulatory Basis
- clause (b) of sub-section (1) of section 58G read with clause (aa) of sub-section (5) of section 58B of the Reserve Bank of India Act, 1934
Action Facts
- Primary Impact
- Fine: Rs 13.6 L
- Order Date
- 21 Feb 2024
- Effective From
- 21 Feb 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC