RBI penalizes Hero Fincorp for excess interest collection breaches
Published 26 Sep 2026 · source date 24 Sep 2026
The Reserve Bank of India imposed a monetary penalty of 10 lakh rupees on Hero Fincorp Limited on September 22, 2026, following supervisory findings of non-compliance with RBI's "Fair Practices Code for Lenders – Charging of Interest". The violation emerged during a statutory inspection conducted with reference to the company's financial position as of March 31, 2025. Specifically, Hero Fincorp collected excess interest from certain loan accounts, breaching RBI directions on permissible lending practices.
The enforcement action followed a show-cause notice and consideration of the company's response and oral submissions during a hearing. RBI exercised its penalty authority under the Reserve Bank of India Act, 1934. The regulator emphasized that this action targets regulatory compliance deficiencies and does not validate or invalidate customer transactions, while reserving the right to pursue additional enforcement measures against the lender.
Why it matters
This enforcement action signals RBI's active monitoring of non-bank financial institutions' lending practices and willingness to penalize interest-charging violations. Compliance officers at NBFCs must ensure strict adherence to Fair Practices Code requirements to avoid similar penalties. The case reinforces that interest-related breaches are material conduct-of-business violations with direct supervisory consequences.