RBI Imposes Heavy Monetary Penalty on Infinity Fincorp over Critical KYC and Risk Compliance Failures
The Reserve Bank of India (RBI) has imposed a significant monetary penalty on Infinity Fincorp Solutions Private Limited. The fine was levied for non-compliance with critical provisions outlined in the 'Reserve Bank of India (Know Your Customer (KYC)) Directions' and related directions issued under the Fair Practice Code.This supervisory action underscores the RBI’s strict stance on financial integrity within the industry. Infinity Fincorp Solutions Private Limited has been penalized ₹5.40 lakh, totaling Rupees Five lakh forty thousand only. The penalty was imposed in exercise of powers granted to the RBI under Section 58(G)(1)(b) read with Section 58(B)(5)(aa) of the Reserve Bank of India Act, 1934.
Basis of Regulatory Non-Compliance
The penal action stems from a statutory inspection conducted by the RBI. This inspection reviewed the company’s financial position as recorded up to March 31, 2025. Based on these supervisory findings, an initial notice was issued advising the firm to explain why a penalty should not be imposed for failing to adhere to the requisite directions.Following careful consideration of Infinity Fincorp's response and oral submissions during a personal hearing, the RBI sustained multiple charges against the company. These failures pertain directly to core risk management protocols that are mandated under current regulations.
Key Deficiencies in Risk Management Protocols
One of the primary charges relates to internal review processes for accounts. The company failed to institute and maintain a system designed for the periodic review of account risk categorization. This required periodicity must be maintained at a minimum once every six months.Furthermore, regulatory scrutiny highlighted deficiencies in transparency regarding lending practices. Infinity Fincorp was found to have failed to adequately disclose its method and rationale for assessing risk gradation. This includes providing clear details on why different categories of borrowers were charged varying interest rates on their application forms and sanction letters.
Regulatory Intent and Future Action
The RBI emphasized that this disciplinary action is purely based on deficiencies in regulatory compliance, not the validity of any contracts or agreements previously executed by the company with its clientele. The penalty serves as a strong warning regarding adherence to financial governance standards.It is also noted that the imposition of this monetary penalty does not prejudice any other courses of action that may be initiated by the RBI against Infinity Fincorp Solutions Private Limited in the future.
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