Northern arc capital Limited has been imposed a penalty of Rs 2.7 lakhs by the Reserve Bank of India for contraventions related to Know Your Customer compliance requirements. The financial services company disclosed this regulatory action through an official intimation to stock exchanges on January 31, 2026, in compliance with SEBI listing regulations.

Penalty Details and Regulatory Framework

The Reserve Bank of India imposed the penalty under Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934. The speaking order was received by the company via email on January 30, 2026, and relates to the company's financial position as on March 31, 2024.

Nature of Compliance Violation

The penalty stems from contravention of Direction 50 of Reserve Bank of India (Know Your Customer) Directions, 2016. Specifically, the violation relates to the absence of automated software for generation of Anti-Money Laundering alerts during the review period. This represents a significant compliance gap in the company's AML monitoring systems, which are critical for financial institutions to detect and prevent money laundering activities.

Company Response and Corrective Measures

Northern Arc Capital has acknowledged the regulatory action and confirmed that corrective measures have been implemented. The company stated that it has undertaken corrective action to address the compliance issue and has put necessary processes in place at present. This indicates the company's commitment to strengthening its compliance framework and ensuring adherence to regulatory requirements.

Financial Impact and Disclosure Compliance

The monetary impact of the penalty is quantified at Rs 2.7 lakhs, which represents the direct financial implication for the company. The disclosure was made under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, demonstrating the company's commitment to transparency and regulatory compliance in its communications with stakeholders.

Regulatory Context

This penalty highlights the importance of robust AML compliance systems in the financial services sector. The absence of automated software for AML alert generation represents a critical gap in monitoring systems that financial institutions are required to maintain under RBI's KYC directions. The regulatory action underscores RBI's continued focus on ensuring comprehensive compliance with anti-money laundering frameworks across the financial services industry.

Northern Arc Capital reported strong financial results for Q3, with consolidated net profit and revenue showing significant year-on-year growth. The company's performance reflects robust operational execution and business momentum during the quarter.

Financial Performance Overview

The company's Q3 financial metrics demonstrate substantial growth across key parameters:

Profitability Growth

Northern Arc Capital's consolidated net profit reached ₹1 billion in Q3, marking a significant increase of 32.28% compared to ₹756 million recorded in the same quarter of the previous year. This substantial profit growth indicates the company's ability to effectively manage its operations and capitalize on market opportunities.

Revenue Expansion

The company's revenue performance was equally strong, with Q3 revenue climbing to ₹7.2 billion from ₹5.76 billion year-on-year, representing a growth rate of 25.00%. This revenue increase demonstrates the company's successful business expansion and market penetration strategies.

Performance Analysis

The financial results showcase Northern Arc Capital's strong operational performance during Q3. Both profit and revenue metrics exceeded previous year levels, indicating effective business management and positive market conditions. The company's ability to achieve double-digit growth in both key financial parameters reflects its solid market position and operational efficiency.