RBI, however, said the penalty is based on deficiencies in regulatory compliance and does not affect the validity of any transaction or agreement the company has entered into with its customers.
The Reserve Bank of India (RBI) said it has imposed a penalty of Rs 3.1 lakh on Hero Fincorp Ltd for non-compliance with certain provisions related to the Fair Practices Code. RBI, however, said the penalty is based on deficiencies in regulatory compliance and does not affect the validity of any transaction or agreement the company has entered into with its customers.
Decision after notice
The statutory inspection of the company was done by RBI on March 31, 2023. A notice was issued to the company following non-compliance of RBI instructions and correspondence in that regard. The central bank said that after considering the company’s response after the notice and based on personal hearing, RBI found that the allegations against the company were sustained and hence imposition of monetary penalty was necessary. In fact, Hero Fincorp did not inform the borrowers in writing about the terms and conditions of the loan in a local language understood by them.
Monetary penalty of ₹74 crore
According to BusinessLine, the Central Reserve Bank imposed a monetary penalty of ₹74.1 crore on 64 banks and NBFCs during the financial year. In comparison, a total penalty of Rs 33.1 crore was imposed on 41 lenders in FY 2023. The data does not include co-operative banks and regional rural banks.
Of the penalties imposed in FY24, 35 regulatory actions were on banks including 16 PSU banks, 13 private banks, four foreign banks and one small finance bank and payments bank. 23 fines were of Rs 1 crore or more. This resulted in three major operational measures taken against Paytm Payments Bank, IIFL Finance and JM Financial Products during the financial year. However, these were a departure from traditional financial penalties imposed by the regulator.
