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Village Financial Services Ltd, Kolkata

NBFCKolkata, West Bengal

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

Recorded RBI impact

Fine: Rs 5.00 L

Monetary penalty · Fresh imposition

S2

Published by RBI

12 Aug 2021

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹5 lakh on Village Financial Services Ltd, Kolkata by order dated August 11, 2021. The penalty was for non-compliance with certain provisions of the RBI (Know Your Customer) Directions, 2016. RBI said a statutory inspection for the company’s financial position as on March 31, 2018 and March 31, 2019 found that it had failed to put in place robust software for effective identification and reporting of suspicious transactions. After issuing a show-cause notice and considering the company’s reply, oral submissions, and additional submissions, RBI concluded that the charge was substantiated and warranted penalty under the RBI Act, 1934.

Why RBI Acted

KYC / AMLReporting & disclosure

RBI imposed a monetary penalty under section 58G read with section 58B(5)(aa) of the RBI Act, 1934 after a statutory inspection (reference dates March 31, 2018 and March 31, 2019) found non-compliance with the Reserve Bank of India (Know Your Customer) Directions, 2016. The release specifically notes the company’s failure to put in place robust software for effective identification and reporting of suspicious transactions. RBI considered the company’s reply, oral submissions, and additional submissions before concluding that the contravention was substantiated.

Operating Impact

The company must absorb the monetary penalty and address the compliance gaps identified by RBI, particularly around KYC controls and suspicious transaction monitoring/reporting. The action does not itself suspend operations, but it signals heightened regulatory scrutiny of the company’s compliance framework.

Regulatory Basis

  • 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
  • Reserve Bank of India ( Know Your Customer (KYC )) Directions, 2016

Action Facts

Primary Impact
Fine: Rs 5.00 L
Order Date
11 Aug 2021
Effective From
11 Aug 2021
Entities Affected
1
Entity Role
Primary
Entity Type
NBFC