Recorded RBI impact
Fine: Rs 3.10 L
Monetary penalty · Fresh imposition
Published by RBI
24 May 2024
Case Brief
The Reserve Bank of India imposed a monetary penalty on Hero FinCorp Limited by order dated May 22, 2024. The penalty was for non-compliance with certain provisions of the RBI’s Non-Banking Financial Company Directions, 2016, specifically those relating to the Fair Practices Code. RBI found that the company did not convey the terms and conditions of loans in writing to borrowers in the vernacular language understood by them, following a statutory inspection and supervisory proceedings under the RBI Act, 1934.
Why RBI Acted
RBI imposed a monetary penalty under section 58G(1)(b) read with section 58B(5)(aa) of the RBI Act, 1934 after a statutory inspection and show-cause process. The sustained charge was that the company failed to convey the terms and conditions of loans in writing to borrowers in the vernacular language understood by them, contrary to the RBI’s 2016 NBFC Directions relating to Fair Practices Code.
Operating Impact
Hero FinCorp Limited must absorb the monetary penalty and remains subject to any further RBI action that may be initiated. The action does not itself invalidate customer transactions, but it signals a compliance lapse in borrower communication and fair-practice disclosures.
Regulatory Basis
- clause (b) of sub-section (1) of section 58G
- clause (aa) of sub-section (5) of section 58B of the Reserve Bank of India Act, 1934
Action Facts
- Primary Impact
- Fine: Rs 3.10 L
- Order Date
- 22 May 2024
- Effective From
- 22 May 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC