RBI penalises Repco Home Finance over Fair Practice Code interest-rate disclosure
HFC and NBFC compliance teams must disclose their risk-gradation approach and interest-rate rationale in application forms and sanction letters
Change
By an order dated 5 June 2026, the Reserve Bank of India (RBI) penalised Repco Home Finance Limited ₹70,000 under the Fair Practice Code for failing to disclose, in application forms and sanction letters, its approach to risk gradation and the rationale for charging different interest rates to different borrower categories.
Why it matters
RBI sustained one charge: Repco did not disclose the risk-gradation approach and the rationale for differential interest rates across borrower categories in its application forms and sanction letters, breaching the Fair Practice Code directions. The Fair Practice Code disclosure obligation applies across housing finance companies and NBFCs. The penalty followed a National Housing Bank statutory inspection referenced to 31 March 2025 and a show-cause process, and addresses regulatory-compliance deficiencies without pronouncing on the validity of customer agreements.
Implications
- — HFC and NBFC compliance teams must confirm their application forms and sanction letters actually state the risk-gradation approach and the rationale for differential interest rates across borrower categories — RBI sustained a penalty on this exact Fair Practice Code disclosure gap, so template silence on rate-setting rationale is an enforced compliance failure.
- — HFC and NBFC product and credit-policy teams must ensure the documented basis for interest-rate differentiation is reflected in borrower-facing documents, not only in internal pricing policy, as the Fair Practice Code requires the disclosure to reach the applicant.
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