The RBI on Friday said it has imposed a penalty of Rs 3.1 lakh on Hero FinCorp Limited for non-compliance with certain provisions relating to fair practices code.

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The Reserve Bank, however, added the penalty is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers. The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2023.

Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the directions, it said.

"After considering the company's reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found, inter alia, that the ... Charge against the company was sustained, warranting imposition of monetary penalty," the central bank said.

Hero FinCorp did not convey the terms and conditions of loans in writing to borrowers in the vernacular language understood by them, it said. The RBI also said imposition of the monetary penalty is without prejudice to any other action that may be initiated by it against the company.