Double Regulatory Hit: RBI Penalises Hero Fincorp for Excess Interest Collection and Ola Financial for KYC Lapses

The Supervisory Mandate: Precision Lending and Customer Fair Treatment

The Reserve Bank of India (RBI) has underscored its zero-tolerance approach toward retail credit miscalculations and digital KYC lapses by issuing back-to-back monetary penalties against two prominent shadow-banking and digital payments entities: Hero Fincorp Limited and Ola Financial Services Private Limited.

The orders, signed by RBI Chief General Manager Brij Raj, emerge from comprehensive statutory supervisory inspections and follow formal show-cause proceedings where institutional defenses were reviewed during personal hearings.

Order 1: Hero Fincorp Penalised for Charging Excess Loan Interest

Under Press Release 2026-2027/1180, the central bank slapped a ₹10.00 Lakh monetary penalty on Hero Fincorp Limited, the retail lending and vehicle finance subsidiary of the Hero Group.

• Legal Authority: Exercised under Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934.
• The Violation: Non-compliance with directions on ‘Fair Practices Code for Lenders – Charging of Interest’.
• Specific Finding: The statutory inspection of the company’s financial position as on March 31, 2025, revealed that Hero Fincorp collected excess interest from certain loan accounts.

The finding touches upon an area where the RBI has issued stern warnings to the banking and NBFC ecosystem: eliminating unfair practices such as charging interest from the date of loan sanction rather than actual disbursement, deducting advance interest without transparent disclosure, and incorrect day-count conventions.

Order 2: Ola Financial Services Fined Over KYC Risk Categorisation Deficiencies

Under Press Release 2026-2027/1179, the central bank imposed a ₹3.10 Lakh monetary penalty on Ola Financial Services Private Limited, the fintech arm founded under ANI Technologies.

• Legal Authority: Enforced under Section 30(1) read with Section 26(6) of the Payment and Settlement Systems Act, 2007 (PSSA).
• The Violation: Non-compliance with provisions of the ‘Know Your Customer (KYC)’ Master Directions.
• Specific Finding: Following an inspection covering operations from January 2025 to November 2025, the RBI sustained the charge that Ola Financial Services failed to carry out mandatory risk categorisation of certain customers.

Under Anti-Money Laundering (AML) standards, every regulated entity must segment customers into Low, Medium, and High-Risk tiers based on transaction value, geography, and profile to apply appropriate continuous transaction monitoring.

Comparative Enforcement Matrix

Compliance MetricHero Fincorp LimitedOla Financial Services Pvt Ltd

RBI PR Identifier

PR 2026-2027/1180

PR 2026-2027/1179