Chapter V — Penalties

Section 58G: Power of Bank to impose fine

Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026

Section 58G gives RBI an administrative power to impose monetary penalties on an NBFC for qualifying contraventions/defaults of the nature referred to in Section 58B, subject to notice and reasonable opportunity of hearing.

Operative provisionOfficial sources mappedProvision-specific decode

Finin2min - Section 58G in 2 minutes

Legal effectSection 58G gives RBI an administrative power to impose monetary penalties on an NBFC for qualifying contraventions/defaults of the nature referred to in Section 58B, subject to notice and reasonable opportunity of hearing.

Operative ruleThe section specifies penalty ceilings/formulas for different defaults, a demand/payment process and recovery route, and prevents parallel complaint/administrative proceedings for the same default in the circumstances stated.

Connected lawUse the current amended penalty amounts and identify whether the breach is continuing; do not rely on older values found in historical reproductions.

File evidenceRetain show-cause notice, response, hearing record, RBI order, demand notice, payment/recovery record and evidence that the same breach is not being pursued through an incompatible parallel route.

Statutory structure and clause / subsection decode

This map separates the operative limbs of this provision so thresholds, powers, conditions and exceptions are not collapsed into a single summary.

58G(1)(a)

For an NBFC contravention/default of a Section 58B nature, RBI may impose a penalty up to Rs 25,000 under the general limb.

58G(1)(b)

For Section 58B(4A) or Section 58B(5)(a)/(aa) cases: up to Rs 10 lakh or twice the amount involved where quantifiable, whichever is more; continuing default may attract up to Rs 1 lakh per day after the first.

58G(2)

Show-cause notice and reasonable opportunity of being heard are mandatory before imposition.

58G(3)

Penalty is payable within 30 days of service of RBI demand; non-payment can be recovered through the principal civil court route specified.

58G(4)

Court certificate is enforceable like a civil-court decree.

58G(5)

No court complaint for the same contravention/default once RBI has imposed penalty under Section 58G.

58G(6)

If a court complaint has already been filed for that Section 58B-type contravention/default, RBI cannot initiate Section 58G penalty proceedings for it.

Worked practical example

Facts. When RBI penalises an NBFC for a continuing reporting default, the legal memo should reproduce the current statutory formula, count only the legally relevant default period and reconcile the final order rather than estimate from a headline daily amount.

Compliance points and common mistakes

Do not decide the issue from the heading alone. Map the facts to the operative words of Section 58G and to each relevant subsection, clause, proviso or explanation shown above.
Keep the statutory question separate from the operational overlay. Use the current amended penalty amounts and identify whether the breach is continuing; do not rely on older values found in historical reproductions.
Do not convert an exception, exemption or discretionary RBI/Government power into an automatic entitlement. Record the authority, conditions and effective date.
Where the provision is historical, omitted or repealed, state that status prominently and do not present it as a current compliance obligation.

Connected provisions and instruments

Section 58G has no universal instrument dependency in this package. Add an RBI circular or direction only when its subject, entity and effective date cover the issue being analysed.

Questions and answers

What is the purpose of Section 58G?

Power of Bank to impose fine: Section 58G gives RBI an administrative power to impose monetary penalties on an NBFC for qualifying contraventions/defaults of the nature referred to in Section 58B, subject to notice and reasonable opportunity of hearing.

Which statutory limb should be checked first?

58G(1)(a) - For an NBFC contravention/default of a Section 58B nature, RBI may impose a penalty up to Rs 25,000 under the general limb.

What is the next legal boundary?

58G(1)(b) - For Section 58B(4A) or Section 58B(5)(a)/(aa) cases: up to Rs 10 lakh or twice the amount involved where quantifiable, whichever is more; continuing default may attract up to Rs 1 lakh per day after the first.

What record should support the conclusion?

Section 58G file evidence: Retain show-cause notice, response, hearing record, RBI order, demand notice, payment/recovery record and evidence that the same breach is not being pursued through an incompatible parallel route.

Primary sources

Source control for Section 58G: use the official consolidated RBI Act for the statutory text and footnotes, then separately reconcile any post-Finance Act 2022 amendment, commencement notification or RBI instrument relevant to the event date.