RBI imposes monetary penalty on Hero FinCorp Limited
The Reserve Bank of India (RBI) has levied a monetary penalty of ₹3,10,000 (Rupees Three Lakh Ten Thousand) on Hero FinCorp Limited for failing to comply with certain provisions of the ‘Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’. The non-compliance pertains specifically to the Fair Practices Code mandated by the RBI.
The penalty was imposed following the RBI’s statutory inspection of Hero FinCorp, which assessed the company’s financial position as of March 31, 2023. The inspection revealed that Hero FinCorp did not communicate the terms and conditions of loans in writing in the vernacular language understood by borrowers, a requirement under the RBI’s directions.
Upon identifying the non-compliance, the RBI issued a notice to Hero FinCorp, requesting the company to explain why a penalty should not be imposed. The company submitted a response, and after reviewing the reply, oral submissions during a personal hearing, and additional information provided, the RBI determined that the non-compliance charge was substantiated.
The RBI clarified that this penalty addresses deficiencies in regulatory compliance and does not affect the legality of any transactions or agreements Hero FinCorp has with its customers. Furthermore, the RBI indicated that this penalty does not preclude the possibility of other actions being taken against the company in the future.
This enforcement action highlights the RBI’s ongoing commitment to ensuring strict adherence to regulatory norms by financial institutions to protect consumer interests and maintain the integrity of the financial system.
