RBI penalized five NBFCs in one week (mid-August 2026) for regulatory non-compliance. Two cases—Shri Ram Finance Corporation Private Limited (₹8.10 lakh) and Progfin Private Limited (₹2.70 lakh)—are highlighted as illustrative of recurring compliance gaps across the sector. Neither case involved fraud or customer harm; both stemmed from procedural failures in KYC risk categorization, periodic review processes, CKYCR uploads, and governance approvals for director appointments. RBI clarified the penalties address regulatory deficiencies only and don’t affect the validity of any customer transactions or agreements, and remain without prejudice to further action.
Key Points — What’s Inside
Case 1: Shri Ram Finance Corporation (₹8.10 Lakh)
- Director appointed without RBI’s prior written approval
- Resulting change in management exceeded the 30% threshold (excluding independent directors)
- No system in place to classify customers into low/medium/high risk
- KYC records not uploaded to CKYCR within prescribed timelines
Case 2: Progfin Private Limited (₹2.70 Lakh)
- No system for periodic (six-monthly) review of customer risk categorisation
- Highlights that risk classification must be reassessed regularly, not treated as a one-time exercise
RBI’s Position
- Penalties relate strictly to compliance deficiencies
- No bearing on validity of customer transactions/agreements
- Action taken without prejudice to further RBI action
Common Themes Across Both Cases
- Missing/undocumented risk-categorisation framework
- No periodic (six-monthly) risk review process
- Delayed/incomplete CKYCR uploads
- Director appointments lacking RBI approval where board composition change exceeds 30%
Recommended Compliance Checklist
- Documented risk-categorisation system (low/medium/high)
- Six-monthly review cycle with recorded dates
- Timely CKYCR uploads
- RBI approval for director appointments altering board composition >30%
