RBI Imposes Rs 3.1 Lakh Penalty on Hero FinCorp for Fair Practices Code Violation
The Reserve Bank of India (RBI) has imposed a penalty of Rs 3.1 lakh on Hero FinCorp Limited due to non-compliance with certain provisions of the fair practices code. This penalty is based on deficiencies in regulatory compliance and does not affect the validity of any transactions or agreements the company has with its customers.
The RBI conducted a statutory inspection of Hero FinCorp with reference to its financial position as of March 31, 2023. This inspection revealed instances of non-compliance with RBI directives.
Following the inspection, supervisory findings indicated non-compliance with RBI directions. Correspondence was exchanged, and a notice was issued to Hero FinCorp, advising the company to explain why a penalty should not be imposed for its failure to comply with these directions.
Hero FinCorp responded to the notice, participated in oral submissions during a personal hearing, and provided additional submissions. After reviewing these, the RBI concluded that the charges against the company were substantiated, leading to the imposition of the monetary penalty.
One key violation noted was that Hero FinCorp did not communicate the terms and conditions of loans in writing to borrowers in the vernacular language understood by them.
The RBI clarified that the imposition of this penalty is without prejudice to any other actions that may be initiated against the company.
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