**Executive Summary**
This press release, dated January 30, 2026, announces that 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’. This penalty was issued following a statutory inspection of the company’s financial position as of March 31, 2024.
**Key Points / Main Content**
* **Monetary Penalty:**
* RBI imposed a monetary penalty of ₹2.70 lakh on Northern Arc Capital Limited.
* The penalty was imposed by order dated January 29, 2026.
* **Reason for Penalty:**
* The penalty is for non-compliance with certain provisions of the ‘Reserve Bank of India [Know Your Customer (KYC)] Directions’.
* The company failed to put in place any IT system / software for effective identification and reporting of suspicious transactions.
* **RBI Authority:**
* The penalty was 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.
* **Background:**
* The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2024.
* A show-cause notice was issued to the company regarding the non-compliance.
* RBI considered the company's reply, additional submissions, and oral submissions during a personal hearing before sustaining the charge.
* **Disclaimer:**
* The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of transactions/agreements with customers.
* The monetary penalty does not prejudice any other action that RBI may initiate against the company.
**Impact Analysis**
**Northern Arc Capital Limited**
* **Impact:**
* Financial penalty of ₹2.70 lakh.
* Potential reputational impact due to non-compliance.
* **Action Required:**
* Pay the penalty.
* Implement necessary IT system/software for effective identification and reporting of suspicious transactions to comply with KYC Directions.
**RBI**
* **Impact:**
* Ensure compliance with regulatory directives in the banking system.
* Protect the validity of transactions with the public.
* **Action Required:**
* Monitor compliance of Northern Arc Capital Limited with regulatory directives.
* Take further necessary actions as deemed fit to ensure stability of the financial system.
Key Entities Referenced
Reserve Bank of India (RBI): The regulator imposing the monetary penalty.
Northern Arc Capital Limited: The entity on which the monetary penalty is imposed.
Reserve Bank of India [Know Your Customer (KYC)] Directions: The directions for non-compliance with which the penalty was levied.
Reserve Bank of India Act, 1934: The act under which RBI's powers are conferred.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
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