Monetary Penalty on Five Star Business Finance Limited
RBI press-release 2026-2027/501 · 19 Jun 2026
Official title
RBI imposes monetary penalty on Five Star Business Finance Limited
RBI press-release 2026-2027/501 · 19 Jun 2026
Official title
RBI imposes monetary penalty on Five Star Business Finance Limited
Summary
Check the official recordThe Reserve Bank of India imposes a monetary penalty of ₹6.20 lakh on Five Star Business Finance Limited. The company failed to maintain robust software for the identification and reporting of suspicious transactions. The company also failed to disclose its risk gradation approach and interest rate rationale in application forms and sanction letters. This action follows a statutory inspection of the company financial position as of March 31, 2025. The penalty results from non-compliance with Know Your Customer directions and Fair Practice Code directions. This action does not affect the validity of any customer transactions or agreements.
Key dates
Who is affected
Thresholds
If you do not comply
June 19, 2026
RBI imposes monetary penalty on Five Star Business Finance Limited
The Reserve Bank of India (RBI) has, by an order dated June 18, 2026, imposed a monetary penalty of ₹6.20 lakh (Rupees Six Lakh Twenty Thousand only) on Five Star Business Finance Limited (the company) for non-compliance with certain provisions of ‘Reserve Bank of India (Know Your Customer (KYC)) Directions’ and the directions issued by RBI on ‘Fair Practice Code’. 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 charges against the company were sustained, warranting imposition of monetary penalty:
i. The company failed to put in place a robust software for effective identification and reporting of suspicious transactions; and
ii. The company failed to disclose the approach for gradation of risk and rationale for charging different rate of interest to different categories of borrowers in the application forms and the sanction letters.
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.
(Brij Raj) Press Release: 2026-2027/501 Chief General Manager
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ǐरज़वर् बैंक
RESERVE BANK OF INDIA
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