RBI fines Five Star Business Finance ₹6.20 lakh for KYC lapses
Regulator penalised NBFC for deficient KYC software and non-disclosure of risk grading in loan applications.
What changed
- Penalty of ₹6.20 lakh imposed on Five Star Business Finance
- Charges: failure to implement adequate KYC software for suspicious transaction reporting
- Charges: failure to disclose risk grading and interest rate rationale in loan forms
The read
RBI slapped a ₹6.20 lakh penalty on Five Star Business Finance after a statutory inspection found two compliance failures. The non-bank failed to deploy adequate software to identify suspicious transactions and did not disclose its risk-grading approach or the rationale for different interest rates in loan application forms. These lapses, uncovered during the inspection as of March 31, 2025, violate KYC norms and fair practice code directives. The action, dated June 18, 2026, reflects RBI’s tightening scrutiny of NBFC conduct. Verdict: compliance gaps, especially in transparency and anti-money laundering systems, invite regulatory ire.
Key numbers
- Penalty amount: ₹6.20 lakh
- Inspection reference date: March 31, 2025
- Order date: June 18, 2026
Primary source: rbi.org.in