The Reserve Bank of India (RBI) has, by an order dated January 03, 2025, imposed a monetary penalty of ₹50,000/- (Rupees Fifty thousand only) on Indian School Finance Company Pvt. Ltd., Telangana (the company) for non-compliance with certain directions issued by RBI on ‘Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of 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 with reference to its financial position as on March 31, 2023. Based on 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 its failure to comply with the said directions. After considering the company’s reply to the notice 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 had outsourced one of its core management functions, viz; Internal Audit to an external Auditor.

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.

(Puneet Pancholy)  
Chief General Manager

Press Release: 2024-2025/1889