RBI imposes monetary penalty on Five Star Business Finance Limited

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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 वेबसाइट : www.rbi.org.in/hindi संचार ͪ वभाग, केंद्रȣय कायार्लय, शहȣद भगत ͧ संह मागर्, फोटर्, मुंबई - 400 001 Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort, ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502