Rail Vikas Nigam Limited was fined ₹8.26 lakh each by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) for non-compliance with board composition norms for the quarter ended March 31, 2025. The penalties, inclusive of GST, were imposed under Regulation 30 of the SEBI (LODR) Regulations, 2015, citing violations of Regulations 17(1), 18(1), 19(1)(2), 20(2), 20(2A), and 21(2). While the fines represent a regulatory penalty, the company stated that the action has no impact on its financial or operational activities.

The exchange communications were received on May 29, 2025. The BSE fine was communicated via email referencing SEBI Master Circular No. SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024. The NSE issued letter no. NSE/LIST-SOP/COMB/FINES/0607 on the same date. Both exchanges cited identical regulatory breaches regarding the composition of the Board and its committees.

Rail Vikas Nigam clarified in letters dated May 9, May 15, and May 28, 2025, that it is a Government company under Section 2(45) of the Companies Act, 2013. Consequently, the power to appoint Directors, including Independent Directors and Woman Independent Directors, rests with the President of India. All directors are appointed by the Government of India through the Ministry of Railways (MoR), leaving the company with no role in the appointment process.

Waiver Eligibility

The company noted that it becomes eligible for a waiver of these fines upon attaining compliance with SEBI (LODR) regulations through the appointment of the requisite number of directors by the MoR. Rail Vikas Nigam highlighted that in earlier instances of similar non-compliance, both the NSE and BSE had waived the imposed fines once the requisite compliances were met.

Rail Vikas Nigam Limited’s Board of Directors reviewed penalties imposed by the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) for non-compliance with board composition norms during the quarter ended March 31, 2025. The exchanges cited violations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, specifically Regulation 17(1), 18(1), 19(1)(2), 20(2)(2A), and 21(2). The Board deliberated on these findings in a meeting held on July 2, 2025, noting that the company has no authority to appoint directors as it is a Government company.

The regulatory action stems from vacancies in Independent Director positions, including the mandatory Woman Independent Director role. Rail Vikas Nigam clarified that director appointments vest with the President of India, executed through the Ministry of Railways (MoR). Consequently, the company stated it plays no role in the appointment process, attributing compliance gaps to administrative timelines rather than internal governance failures. The Board noted that several reminder letters have been sent to the MoR requesting immediate action to fill these vacancies.

Regulatory Context and Company Response

In its disclosure dated July 2, 2025, signed by Company Secretary Kalpana Dubey, Rail Vikas Nigam detailed the ongoing follow-up with the Ministry of Railways. The company emphasized that despite continuous reminders, the appointment of requisite independent directors remains pending with the administrative ministry. This structural constraint is consistent with previous instances where the company faced similar scrutiny for board composition lapses.

The company previously disclosed that upon attaining compliance through appointments by the MoR, it will be eligible for a waiver of fines under SEBI’s policy for exemption of fines. Historical precedent suggests that both NSE and BSE have waived similar fines in earlier instances, recognizing the unique constraints faced by public sector undertakings.

What the Numbers Show

While the specific fine amount for the quarter ended March 31, 2025, was not quantified in this specific disclosure, the recurring nature of these penalties highlights a systemic dependency on government administrative processes for corporate governance compliance. For context, a separate penalty of ₹9,77,040 was imposed by the NSE for non-compliance during the quarter ended September 30, 2025, underscoring the persistent challenge in aligning statutory board requirements with bureaucratic appointment timelines. The financial impact of such fines is deemed immaterial to the company’s overall operations, but the regulatory scrutiny remains a key governance risk factor for listed public sector entities.