**Executive Summary**
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹2.70 lakh on Northern Arc Capital Limited for non-compliance with certain provisions of the ‘Reserve Bank of India [Know Your Customer (KYC)] Directions’. The penalty was imposed under Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934. The order was dated January 29, 2026.
**Key Points / Main Content**
* **Penalty Imposition:**
* RBI imposed a monetary penalty of ₹2.70 lakh on Northern Arc Capital Limited.
* The penalty is for non-compliance with KYC directions.
* **Legal Basis:**
* The penalty was imposed under specific sections of the Reserve Bank of India Act, 1934: Section 58G(1)(b) and Section 58B(5)(aa).
* **Inspection and Findings:**
* The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2024.
* The penalty was imposed based on non-compliance with RBI directions.
* The company was issued a notice advising it to show cause as to why penalty should not be imposed.
* **Reason for Penalty:**
* The company failed to put in place any IT system / software for effective identification and reporting of suspicious transactions.
* **Disclaimer:**
* The 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.
* The imposition of this penalty does not prevent RBI from initiating further action against the company.
**Impact Analysis**
**Northern Arc Capital Limited**
* **Impact:**
* Financial penalty of ₹2.70 lakh.
* Reputational impact due to non-compliance.
* **Action Required:**
* Pay the monetary penalty.
* Implement an effective IT system for identification and reporting of suspicious transactions.
* Ensure compliance with KYC directions to avoid future penalties.
Key Entities Referenced
Reserve Bank of India (RBI): India's central bank, responsible for monetary policy and regulation of the banking sector; imposed the penalty.
Northern Arc Capital Limited: The company on which the monetary penalty was imposed for non-compliance.
Reserve Bank of India [Know Your Customer (KYC)] Directions: Regulatory guidelines issued by the RBI regarding Know Your Customer norms, which Northern Arc Capital Limited failed to comply with.
Reserve Bank of India Act, 1934: The act that empowers the RBI, specifically sections used to impose the penalty.
Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934: The specific section under which the penalty was imposed.
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RESERVE BANK OF INDIA
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Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
January 30, 2026
RBI imposes monetary penalty on Northern Arc Capital Limited
The Reserve Bank of India (RBI) has, by an order dated January 29, 2026,
imposed a monetary penalty of ₹2.70 lakh (Rupees Two Lakh Seventy Thousand
only) on Northern Arc Capital Limited (the company) for non-compliance with certain
provisions of the ‘Reserve Bank of India [Know Your Customer (KYC)] Directions’
issued by RBI. This penalty has been imposed in exercise of powers conferred on
RBI under Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of
India Act, 1934.
The statutory inspection of the company was conducted by RBI with reference to
its financial position as on March 31, 2024. Based on the supervisory findings of non-
compliance with RBI directions and related correspondence in that regard, a notice
was issued to the company advising it to show cause as to why penalty should not be
imposed on it for failure to comply with the said direction.
After considering the company’s reply to the notice, additional submissions made
by it and oral submissions made during the personal hearing, RBI found, inter alia,
that the following charge against the company was sustained, warranting imposition
of monetary penalty:
The company failed to put in place any IT system / software for effective
identification and reporting of suspicious transactions.
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.
(Brij Raj)
Press Release: 2025-2026/2025 Chief General Manager