RBI imposes Monetary Penalty on Berar Finance Limited and ECL Finance Limited (NBFCs)

The Reserve Bank of India (RBI) has recently imposed a monetary penalty of ₹10.54 lakh on Berar Finance Limited, Nagpur, and ₹4.90 lakh on ECL Finance Limited, Mumbai, for non-compliance with certain provisions of the RBI (Know Your Customer (KYC)) Direction, 2016.

As per the RBI’s press release, the NBFCs failed to (i) put in place a system of periodic review of risk categorisation of accounts, and (ii) put in to use any robust software for effective identification and reporting of suspicious transactions.

In past also there are so many instances where the RBI has taken strict actions against Banks and NBFCs for such non-compliances. Thus, it is very essential for Banks (Specifically Co-operative Banks) and NBFCs to have a periodic check on its compliances status to avoid such penalties.