1. Key Details
| Regulated Entity (RE) | Pinnacle Capital Solutions Private Limited, Jharkhand |
| Penalty Amount | ₹ 1,00,000 (One Lakh) |
| Order Date | December 9, 2025 |
| Regulatory Provision | Section 58G(1)(b) read with Section 58B(5)(aa) of RBI Act, 1934 |
| Specific Violation | Obtaining a Default Loss Guarantee (DLG) from a Lending Service Provider (LSP) exceeding 5% of the outstanding loan portfolio. |
2. Root Cause Analysis (RCA)
Why did this happen?
- Lack of Dynamic Monitoring: The entity likely failed to implement real-time monitoring of the DLG cover against the fluctuating “outstanding loan portfolio.” As the portfolio size changes (repayments or new disbursals), the 5% absolute limit changes dynamically.
- Defective LSP Agreements: The Master Agreement with the Lending Service Provider (LSP) may not have included an explicit “Cap Clause” that automatically restricts the guarantee invocation or accrual to 5%.
- System Configuration Gaps: The Loan Management System (LMS) or Partner Integration Module may have lacked a hard validation rule to reject DLG collaterals exceeding the statutory limit.
3. Preventive Controls
| Control Type | Action Item |
|---|---|
| Automated Hard Stop | Implement a logic check in the LMS that calculates (Total DLG Amount / Outstanding Portfolio) * 100. If the result > 5%, the system should block further DLG acceptance or trigger an alert. |
| Contractual Safeguards | Amend all LSP agreements to include a “Regulatory Cap” clause, stating that any guarantee amount exceeding 5% is null and void or must be refunded/released immediately. |
| Reconciliation | Conduct monthly reconciliation of DLG holdings vs. Portfolio Outstanding to ensure compliance with the RBI Digital Lending Guidelines (2022). |
4. Lessons Learnt
For Compliance Officers & Risk Managers:
- The “5% Cap” is Absolute: This penalty reinforces that RBI strictly enforces the quantitative limits set in the Digital Lending Guidelines. There is no tolerance for “slight” breaches.
- LSP Governance is Critical: The Regulated Entity (NBFC) acts as the principal. The failure of an LSP to adhere to limits (or the NBFC’s acceptance of it) results in direct penalization of the NBFC.
- Scrutiny Focus: The RBI conducted a specific scrutiny of “digital lending operations”, signaling that Digital Lending remains a high-priority supervisory area.