The Reserve Bank of India announced on Friday that it has imposed penalties on two financial firms for non-compliance with regulatory provisions. Shri Ram Finance Corporation was fined ₹8.10 lakh, while Progfin received a penalty of ₹2.70 lakh. According to reports from The Economic Times, both penalties were imposed for failing to comply with certain provisions and directions set by the central bank.
Shri Ram Finance Corporation was penalized for multiple regulatory failures, as reported by The Economic Times. The company failed to obtain prior written permission from RBI while appointing a director, resulting in a change in management due to a change in more than 30% of its directors, excluding independent directors. Additionally, the firm failed to establish a system for categorizing customers as low, medium and high risk categories and failed to upload KYC records of certain customers onto Central KYC Records Registry within the prescribed timeline. As per the latest RBI order dated August 19, 2026, the penalty was imposed after deficiencies were found in compliance with governance and KYC guidelines during an inspection conducted with reference to the company's financial position as of March 31, 2025. According to the regulator, during the appointment of directors, when there was a change in management due to more than 30% of directors (excluding independent directors) being changed, the company did not obtain prior written approval from the RBI. The company also failed to establish a system for classifying customers into low, medium, and high-risk categories, and some customers' KYC records were not uploaded to the Central KYC Records Registry within the stipulated timeframe.
Progfin faced penalties for inadequate risk management practices, according to The Economic Times report. The company failed to implement a system of periodic review of risk categorization of accounts with such periodicity being at least once in six months. This regulatory failure resulted in the central bank imposing the ₹2.70 lakh penalty on the financial firm.
Both penalties highlight the significance of compliance with established regulations in the financial sector, as noted in the RBI release reported by The Economic Times. The fines underscore the central bank's commitment to maintaining proper oversight of financial institutions and ensuring they adhere to all regulatory requirements for customer protection and risk management. This move is being seen as a sign of RBI's strict oversight on governance, management changes, and KYC compliance for non-banking financial companies, increasing pressure on companies in the sector to further strengthen compliance processes such as internal controls, customer risk classification, and timely record uploads. The action is being viewed as a clear signal that the RBI will not tolerate regulatory lapses in the NBFC sector and will take strict action against companies that fail to comply with established guidelines.
