RBI has imposed monetary penalty on Shri Ram Finance, Progfin, Fusion Finance, Northern Arc Capital and Muthoot MCred
FinTech BizNews Service
Mumbai, 21 August, 2026: The Reserve Bank of India (RBI) has imposed a monetary penalty on 5 NBFCs in the last 1 week. RBI has imposed monetary penalty on Shri Ram Finance, Progfin, Fusion Finance, Northern Arc Capital and Muthoot MCred in the last 1 week.
RBI imposes monetary penalty on Shri Ram Finance Corporation Private Limited
The Reserve Bank of India (RBI) has, by an order dated August 19, 2026, imposed a monetary penalty of Rs8.10 lakh (Rupees Eight Lakh Ten Thousand only) on Shri Ram Finance Corporation Private Limited (the company) for non-compliance with certain provisions of the directions issued by RBI on ‘Governance’ and the ‘Reserve Bank of India (Know Your Customer (KYC)) Directions’. This penalty has been imposed in exercise of powers conferred on RBI under section 58G(1)(b) read with section 58B (5) (aa) of the Reserve Bank of India Act, 1934.
The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2025. Based on the supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions.
After considering the company's reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the following charges against the company were sustained, warranting imposition of monetary penalty:
The company failed to take prior written permission of the RBI while appointing a director resulting in change in management, on account of change in more than 30 per cent of its directors, excluding independent directors;
The company failed to put in place a system to categorize its customers as low, medium and high- risk category; and,
The company failed to upload KYC records of certain customers onto Central KYC Records Registry within the prescribed timeline.
This action is based on 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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
RBI imposes monetary penalty on Progfin Private Limited
The Reserve Bank of India (RBI) has, by an order dated August 19, 2026, imposed a monetary penalty of Rs2.70 lakh (Rupees Two lakh seventy thousand only) on Progfin Private Limited (the company) for non-compliance with certain provisions of the ‘Reserve Bank of India (Know Your Customer (KYC)) Directions’. This penalty has been imposed in exercise of powers conferred on RBI under section 58(G)(1)(b) read with section 58(B)(5)(aa) of the Reserve Bank of India Act, 1934.
The Statutory Inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2025. Based on the supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions.
After considering the company’s reply to the notice and oral submissions made during the personal hearing, RBI found that the following charge against the company was sustained, warranting imposition of monetary penalty:
The company failed to put in place a system of periodic review of risk categorisation of accounts, with such periodicity being at least once in six months.
The action is based on 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. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
RBI imposes monetary penalty on Fusion Finance Limited
The Reserve Bank of India (RBI) has, by an order dated August 14, 2026, imposed a monetary penalty of Rs2.70 lakh (Rupees Two Lakh Seventy Thousand only) on Fusion Finance Limited (the company) for non-compliance with certain provisions of ‘Reserve Bank of India (Know Your Customer (KYC)) Directions’ issued by RBI. This penalty has been imposed in exercise of powers conferred on RBI under Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934.
The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2025. Based on the supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions.
After considering the company’s reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the following charge against the company was sustained, warranting imposition of monetary penalty:
The company failed to put in place a system of periodic review of risk categorization of accounts, with such periodicity being at least once in six months.
This action is based on 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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
RBI imposes monetary penalty on Northern Arc Capital Limited
The Reserve Bank of India (RBI) has, by an order dated August 14, 2026, imposed a monetary penalty of Rs6.20 lakh (Rupees Six Lakh Twenty Thousand only) on Northern Arc Capital Limited (the company) for non-compliance with certain provisions of the directions issued by RBI on ‘Disclosures in Financial Statements - Notes to Accounts’ and on ‘Internal Ombudsman for Regulated Entities’. This penalty has been imposed in exercise of powers conferred on RBI under section 58G(1)(b) read with section 58B(5)(aa) of the Reserve Bank of India Act, 1934.
The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2025. Based on the supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions.
After considering the company’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the following charges against the company were sustained, warranting imposition of monetary penalty:
i) The company did not disclose correct and complete information about customer complaints in its Annual Financial Statements for the financial year 2024-25.
ii) The company failed to ensure auto-escalation of certain complaints that were partly or wholly rejected by the company’s Internal Grievance Redress Mechanism, to its Internal Ombudsman.
This action is based on 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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
RBI imposes monetary penalty on Muthoot MCred
The Reserve Bank of India (RBI) has, by an order dated August 14, 2026, imposed a monetary penalty of Rs3.10 lakh (Rupees Three Lakh Ten Thousand only) on Muthoot MCred Limited (Formerly Known as Muthoottu Mini Financiers Limited) (the company) for non-compliance with certain provisions of the directions issued by RBI on ‘Asset Classification’. This penalty has been imposed in exercise of powers conferred on RBI under section 58G(1)(b) read with section 58B(5)(aa) of the Reserve Bank of India Act, 1934.
The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2025. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the company’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the following charge against the company was sustained, warranting imposition of monetary penalty:
The company upgraded certain loan accounts which were ‘non-performing assets’ as ‘Standard’, without repayment of entire arrears of interest and principal pertaining to all the credit facilities.
This action is based on 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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
