The Reserve Bank of India (RBI) has levied a penalty of Rs 3.1 lakh on Hero FinCorp Limited due to regulatory non-compliance in specific areas concerning fair practices code. This penalty, however, reflects deficiencies in adhering to regulatory standards and does not question the validity of the company's transactions or agreements with its clientele.

The imposition of the penalty follows a statutory inspection conducted by the RBI, referencing the company's financial status as of March 31, 2023. Subsequent to supervisory observations indicating deviations from RBI directives and related correspondence on the matter, the company was issued a notice to justify why penalties should not be imposed for its failure to adhere to regulatory directives.

After assessing the company's response to the notice, oral arguments presented during the personal hearing, and reviewing additional submissions, the RBI concluded that the charge against Hero FinCorp was substantiated, necessitating the imposition of a monetary penalty.

One of the identified shortcomings was the company's failure to provide borrowers with loan terms and conditions in a language comprehensible to them. The RBI clarified that the penalty imposed does not preclude any further action that may be taken against the company.

The regulatory action underscores the RBI's commitment to upholding compliance standards within the financial sector, ensuring fair practices and transparency in dealings with customers.