Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
26 Aug 2021
Case Brief
By an order dated August 26, 2021, RBI imposed a monetary penalty of ₹5 lakh on Seyad Shariat Finance Limited, Tirunelveli, Tamil Nadu, for non-compliance with the RBI (Know Your Customer (KYC)) Directions, 2016. The statutory inspection found that the company failed to ensure categorization of customers based on risk assessment and risk perception. RBI issued a show-cause notice, considered the company's response, and then concluded that the contravention was substantiated under the RBI Act, 1934.
Why RBI Acted
RBI imposed a monetary penalty under section 58G(1)(b) read with section 58B(5)(aa) of the RBI Act, 1934 for non-compliance with the Reserve Bank of India (Know Your Customer (KYC) Directions, 2016. The inspection revealed deficiencies in regulatory compliance, including failure to categorize customers based on risk assessment and risk perception. After considering the company's reply to the show-cause notice, RBI concluded the charge was substantiated and warranted penalty.
Operating Impact
The company must absorb the financial penalty; the release does not indicate a suspension or restriction on its operations. The action serves as an enforcement signal for KYC compliance expectations, particularly customer risk classification and related control processes.
Regulatory Basis
- clause (b) of sub-section (1) of section 58 G
- clause (aa) of sub-section (5) of section 58 B of the Reserve Bank of India Act, 1934
- Reserve Bank of India (Know Your Customer (KYC) Directions, 2016
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Order Date
- 26 Aug 2021
- Effective From
- 26 Aug 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC