RBI Imposes Rs 8.10 Lakh Penalty on Finance Firm Over KYC, Governance Lapses:

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 8.10 lakh on Shri Ram Finance Corporation Private Limited for non-adherence to certain regulatory requirements including governance and Know Your Customer (KYC) norms.

The penalty was imposed vide order dated August 19, 2026 under powers conferred by RBI under the Reserve Bank of India Act, 1934.

Based on the financial position as on March 31, 2025, the RBI had subjected the company to a statutory inspection. The regulator found several instances of non-compliance during the inspection and issued a notice to the company seeking an explanation.

After the company’s reply and after further submissions and oral arguments made in a personal hearing, the RBI found three violations to be established.

First, the firm did not get the prior written approval of the RBI before appointing a director, which resulted in a change in the management involving more than 30% of its directors excluding independent directors.

Second, the company did not have a proper system for classifying customers into low-, medium- and high-risk categories, which is required under KYC rules.

Third, the company failed to upload the KYC records of some customers to the Central KYC Records Registry within the prescribed time.

The RBI clarified that the penalty is for non-compliance with regulatory requirements and does not question the validity of any transaction or contract entered into by the company with its customers. The penalty is also without prejudice to any other action that the RBI may take against the company.