RBI Slaps ₹12 Lakh Penalty on Can Fin Homes, 2 NBFCs for Compliance Lapses
Moneylife Digital Team 22 June 2026
Reserve Bank of India (RBI) has imposed a total penalty of ₹12 lakh on two non-banking financial companies (NBFCs) and one housing finance company (HFC) for failing to comply with regulatory directions issued by the banking regulator.
 
The penalised NBFCs are: Tamil Nadu-based Five Star Business Finance Ltd and Gujarat-based Pahal Financial Services Pvt Ltd. RBI has also levied a penalty on Karnataka-based Can Fin Homes Ltd, an HFC, for regulatory non-compliance.
 
Five Star Business Finance has been penalised ₹6.20 lakh for non-compliance with certain provisions of the RBI know-your-customer (KYC) directions and the fair practices code.
 
RBI's statutory inspection found that Five Star Business Finance had not implemented a robust software system for the effective identification and reporting of suspicious transactions. The inspection also revealed that the NBFC failed to disclose its risk-grading methodology and the rationale for charging different interest rates to various categories of borrowers in its application forms and sanction letters.
 
In the case of Pahal Financial Services, the NBFC failed to put in place a robust software system for the effective identification and reporting of suspicious transactions.
 
As a result, RBI penalised Pahal Financial Services ₹3.10 lakh.
 
Karnataka-based Can Fin Homes has been fined ₹2.70 lakh for non-compliance with certain provisions of RBI's fair practices code. The central bank found that the company had failed to clearly disclose the breakup of loan instalments between principal and interest components collected from borrowers.
 
In all three cases, RBI clarified that the penalties are based on deficiencies in regulatory compliance and are not intended to pronounce on the validity of any transactions or agreements these entities entered into with their customers.
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