The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 2.70 lakh on Northern Arc Capital Limited for non-compliance with certain provisions of the RBI Know Your Customer (KYC) Directions, according to an order dated January 29, 2026.

The penalty was imposed under the powers conferred by Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934. The action followed a statutory inspection of the company conducted with reference to its financial position as on March 31, 2024.

Based on supervisory findings, RBI issued a show-cause notice to the company. After considering the company’s written and oral submissions, the central bank concluded that Northern Arc Capital had failed to put in place an adequate IT system or software for effective identification and reporting of suspicious transactions, warranting the imposition of the penalty.

RBI clarified that the action is based solely on regulatory compliance deficiencies and does not reflect on the validity of any transactions or agreements entered into by the company with its customers. The penalty is also without prejudice to any further action that may be initiated by the regulator.