The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹50,000/- on Indian School Finance Company Pvt. Ltd. (ISFC), a non-banking financial company (NBFC) based in Telangana. The penalty was levied for non-compliance with regulatory norms specified under the Reserve Bank of India Act, 1934.
In its official statement, the Reserve Bank of India outlined that the penalty was imposed due to violations related to the Reserve Bank of India (Know Your Customer – KYC) Directions, 2016. The inspection conducted by the central bank revealed that ISFC failed to ensure proper due diligence in its KYC procedures and risk assessment protocols.
The action follows the Reserve Bank of India’s issuance of a notice to ISFC, asking the company to explain why it should not face penalties for its lapses. After considering the company’s response and reviewing all relevant documents, the RBI concluded that the violations warranted a monetary penalty.
The central bank emphasized that the penalty is based on regulatory lapses and does not question the validity of any transactions undertaken by the NBFC with its customers.
Indian School Finance Company Pvt. Ltd. specializes in lending to private schools, educators, and small educational institutions. The RBI’s action underscores the importance of compliance with KYC and anti-money laundering regulations, particularly for NBFCs operating in sensitive sectors like education financing.
This penalty reflects the Reserve Bank of India’s ongoing efforts to strengthen regulatory oversight in the financial sector and to ensure NBFCs adhere to strict compliance norms.
ISFC has yet to issue a statement addressing the RBI’s decision or outlining steps to rectify the identified shortcomings.
