The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹11.50 lakh on Mahindra & Mahindra Financial Services Limited for non-compliance with regulatory directions related to the ‘Fair Practices Code’ and ‘Internal Ombudsman for Regulated Entities’.
The penalty, ordered on February 27, 2026, has been levied under the powers conferred on the RBI under Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934.
The action follows a statutory inspection conducted by RBI with reference to the company’s financial position as on March 31, 2025. Based on supervisory findings and subsequent correspondence, the central bank issued a show-cause notice to the non-banking financial company (NBFC), asking why a penalty should not be imposed for regulatory lapses.
After reviewing the company’s written response and oral submissions during a personal hearing, the RBI concluded that certain charges were substantiated.
Among the key violations, the company was found to have levied revised foreclosure charges on some borrower accounts without incorporating appropriate conditions in the respective loan agreements, which was a breach of fair lending transparency norms.
The RBI also identified shortcomings in the company’s grievance redressal framework. Specifically, the company failed to escalate certain complaints (either partly or wholly rejected by its Internal Grievance Redress Mechanism) to its Internal Ombudsman within the stipulated timeline.
Additionally, in some cases, the company did not communicate final decisions to complainants within the prescribed time limits, contravening the regulatory framework governing customer complaint handling.
The enforcement action highlights the RBI’s continued emphasis on strengthening compliance culture among NBFCs and ensuring robust customer protection frameworks. As regulatory scrutiny intensifies across India’s financial sector, entities are expected to reinforce internal controls, transparency standards, and grievance redressal mechanisms. The penalty serves as a reminder that supervisory findings, even if procedural in nature, can result in monetary consequences and potential reputational impact for regulated entities.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
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Published on: Mar 2, 2026, 9:42 AM IST
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