RBI imposes Monetary Penalty on Early Salary Services for non-compliance with RBI direction

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.3.20 lakh on Early Salary Services Private Limited, Pune (the company) for non-compliance with certain provisions of the “Non-Banking Financial Company (NBFC) – Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016”.

The correspondence between the RBI and the company in response to a supervisory visit/scrutiny performed in October 2021 indicated, among other things, that the company had failed to implement an internal audit system for all outsourced activities. As a result, the company was served with a notice requiring it to show cause why a penalty should not be imposed for failing to comply with the stated orders.

Following consideration of the company’s response to the notice, examination of additional submissions made by it, and oral submissions made during the personal hearing, the RBI concluded that the charge of non-compliance with the aforementioned RBI directions was substantiated and warranted imposition of monetary penalty on the company.

This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 58G (1) (b) read with Section 58B (5) (aa) of the Reserve Bank of India Act, 1934.

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers.