The Reserve Bank of India has imposed a monetary penalty of ₹2.70 lakh on Progfin Private Limited for non-compliance with certain provisions of the Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016.
The order imposing the penalty was dated August 19, 2026. The RBI announced the action through a press release issued on August 21, 2026.
Progfin Private Limited is referred to in the RBI release as “the company”. The central bank did not give details of individual customers, specific accounts, or any particular transaction in the press release.
Reason for the penalty
According to the RBI, the compliance issue related to the company’s failure to put in place a system for periodic review of the risk categorisation of accounts. The RBI said such a review should be carried out at least once in six months.
Risk categorisation of accounts is part of the KYC compliance framework referred to in the RBI release. In this case, the RBI’s finding was not about a single account or transaction, but about the absence of a required system for regular review.
The finding came after a statutory inspection of Progfin Private Limited. The inspection was conducted with reference to the company’s financial position as on March 31, 2025.
Inspection and show-cause process
After the inspection, the RBI relied on supervisory findings and related correspondence. Based on those findings, the central bank issued a notice to Progfin Private Limited.
The notice asked the company to show cause why a penalty should not be imposed for failing to comply with the relevant RBI directions. A show-cause notice gives the regulated entity an opportunity to respond before the regulator takes a final decision.
The RBI said it considered the company’s reply to the notice. It also considered oral submissions made by the company during a personal hearing.
After this process, the RBI concluded that the charge of non-compliance was sustained. It then decided that the matter warranted the imposition of a monetary penalty of ₹2.70 lakh.
Legal provisions cited by RBI
The RBI said the penalty was imposed in exercise of powers available to it under section 58(G)(1)(b), read with section 58(B)(5)(aa), of the Reserve Bank of India Act, 1934.
The cited provisions are the legal basis mentioned by the central bank for imposing the monetary penalty. The release does not provide any separate detail on further legal proceedings.
What the order does and does not decide
The RBI clarified that the action is based on deficiencies in regulatory compliance. It said the order is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers.
This means the press release is limited to the regulatory compliance issue identified by the RBI. It should not be read as a finding on customer contracts, customer dues, or the legal status of any transaction.
The RBI also stated that the imposition of the monetary penalty is without prejudice to any other action that may be initiated against the company. The release does not say that any such separate action has been initiated.
Publication details
The RBI press release was issued on August 21, 2026. It was issued by Brij Raj, Chief General Manager, and carried the reference number 2026-2027/944.
The central bank’s statement is therefore confined to the ₹2.70 lakh penalty, the KYC-related compliance lapse, the inspection reference date of March 31, 2025, and the process followed before the penalty order was passed.
Source: Reserve Bank of India Press Releases.