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The Reserve Bank of India (RBI) has cancelled the Certificate of Registration (CoR) of Star Finserv India Limited, a Non-Banking Financial Company (NBFC) based in Hyderabad, under the powers conferred by Section 45-IA(6) of the RBI Act, 1934. The NBFC had been operating through the digital lending platform Progcap, owned and operated by Desiderata Impact Ventures Private Limited.
Following the cancellation, Star Finserv India Limited is prohibited from transacting any business as a Non-Banking Financial Institution (NBFI) under the RBI Act, 1934.
The cancellation was effected due to multiple violations of RBI guidelines, including:
Outsourcing of core functions: The company outsourced critical operations such as credit appraisal, loan sanctioning, and KYC verification to a third-party service provider, contravening RBI norms.
Data confidentiality breaches: Customer data was fully accessible to the service provider, violating RBI guidelines on data security and confidentiality.
Non-compliance with Fair Practices Code: Loan agreements and sanction letters were not provided to customers in vernacular languages, undermining transparency and customer rights.
RBI’s action underscores its commitment to ensuring regulatory compliance and consumer protection in the digital lending space.
[RBI]