RBI Grade BNABARD ESISEBI
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In February 2026, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹11.50 lakh on Mahindra & Mahindra Financial Services Limited (MMFSL) for regulatory non-compliances observed during its annual inspection.
The inspection was conducted with reference to the company’s financial position as on 31 March 2025 (FY25).
Legal Provisions Invoked
The penalty was levied under:
- Section 58G(1)(b) read with
- Section 58B(5)(aa) of the RBI Act, 1934
These provisions empower RBI to impose penalties on Non-Banking Financial Companies (NBFCs) for regulatory violations.
Reasons for the Penalty
1. Violation of Fair Practices Code
- MMFSL charged revised foreclosure fees on certain loan accounts.
- The revised charges were not incorporated in the loan agreements as required.
- This constituted a breach of the Fair Practices Code prescribed by RBI.
2. Complaint-Handling Deficiencies
RBI observed lapses in the company’s grievance redressal mechanism:
- Complaints were not escalated to the Internal Ombudsman within mandated timelines.
- In some cases, final decisions were communicated to complainants beyond the prescribed time limit.
- These actions violated RBI’s regulatory norms on customer protection and complaint resolution.
Regulatory Action Taken
- The irregularities were detected during RBI’s supervisory inspection.
- RBI issued a show-cause notice to the company.
- After reviewing the company’s response, the central bank imposed the monetary penalty.
