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Company failed to maintain Board-approved microfinance pricing policy and engaged in activities resembling synthetic securitisation
Pooja Srivastava | Anytime News Network
Mumbai. The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹6.20 lakh on Hinduja Leyland Finance Limited for non-compliance with regulatory directions relating to the pricing of microfinance loans and securitisation of standard assets.
The penalty was imposed through an order dated September 2, 2026, under the provisions of the Reserve Bank of India Act, 1934. The action followed a statutory inspection of the company with reference to its financial position as on March 31, 2025.
According to the RBI, supervisory findings revealed shortcomings in the company’s compliance with applicable directions. A show-cause notice was subsequently issued, asking the company to explain why a penalty should not be imposed. The central bank considered the company’s written response, additional submissions and oral arguments made during a personal hearing before arriving at its decision.
The RBI found two charges to be established. First, the company had failed to put in place a Board-approved policy for pricing microfinance loans. Second, it had undertaken activities in the nature of “synthetic securitisation”.
The absence of a Board-approved pricing policy raises concerns over transparency, accountability and oversight in the microfinance lending process. Pricing policies are particularly important in the microfinance sector, where borrowers often depend on small loans and may have limited bargaining power. A clearly approved framework is expected to ensure consistency and proper institutional supervision.
The finding relating to synthetic securitisation also highlights concerns around the company’s compliance with financial risk-management and asset-transfer regulations. Such structures can make it more difficult to assess the actual distribution of risk if they are not carried out within the prescribed regulatory framework.
The RBI clarified that the penalty is based on deficiencies in regulatory compliance and should not be interpreted as a ruling on the validity of any transaction or agreement entered into by the company with its customers. The central bank also stated that the imposition of the penalty does not prevent it from initiating any other action against the company.
The latest action underlines the RBI’s continuing focus on regulatory discipline, internal governance and responsible financial practices. It also sends a clear message to financial institutions that non-compliance with prescribed policies and risk controls can invite monetary and further regulatory consequences.
