RBI imposes monetary penalty on Five Star Business Finance Limited

Case Brief

RBI imposed a monetary penalty of ₹6.20 lakh on Five Star Business Finance Limited under Section 58G(1)(b) read with Section 58B(5)(aa) of the RBI Act, 1934. The penalty followed a statutory inspection and subsequent show-cause process, after which RBI sustained findings that the company had not put in place robust software for effective identification and reporting of suspicious transactions and had not disclosed the approach for gradation of risk and the rationale for charging different rates of interest to different borrower categories in application forms and sanction letters.