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    RBI Fines Belstar Microfinance for KYC Non-compliance

    What’s the news: The Reserve Bank of India (RBI) on May 9, 2024, imposed a penalty of INR 3,10,000 on Belstar Microfinance Limited for non-compliance with the KYC provisions of the central bank.

    “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,” said the RBI in a press release.

    What is Belstar Microfinance? It is a banking website that provides collateral-free loans under both self-help groups (SHG) and PRAGATI models for legally permitted enterprise creation or strengthening, in farm and non-farm sectors.

    Belstar allegedly outsourced KYC compliance decisions: According to a press release, RBI inspected the company’s financials on March 31, 2022. Based on supervisory findings of non-compliance with regulatory directions and related correspondence, it issued a notice to the company advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.

    “After considering the company’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found, inter alia, that the following charge against the company was sustained, warranting imposition of monetary penalty. The company outsourced decision-making functions of determining compliance with KYC norms to certain outsourced agents,” said the RBI.

    The company was penalized for violating certain provisions of the Reserve Bank of India (Know Your Customer (KYC)) Direction, 2016, and other provisions of clause (b) of sub-section (1) of section 58G read with clause (aa) of sub-section (5) of section 58B of the Reserve Bank of India Act, 1934.

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    The post RBI Fines Belstar Microfinance for KYC Non-compliance appeared first on MediaNama.

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