The RBI has declared an imposition of a 10 Lakh Fine on Muthoot Finance based on the its non-compliance. The bank is alleged of non-compliance in maintaining loan-to value ratio in gold loans and on the obtaining of a Pan Card of the borrower when granting loans beyond 5 Lakhs as per the set standards.
Manappuram Finance has also come into the Central Bank’s scrutinizing lens and as a result a fine of 5 Lakh has been administered on it as well. This fine comes over the institution’s non-compliance with directions on verification of ownership of gold jewelry.
The statutory inspection as is compulsory in in this case was made by the RBI on both March, 2018 and March, 2019 and on both occasions certain discrepancies in adhering protocol was sighted in Muthoot Finance. As per protocol a “show cause” notice was issued by the RBI to Muthoot Finance in order to understand the latter’s repeated disregard for protocol issued by the RBI in the above two subjects.
After a careful scrutiny of both Muthoot Finance’s reply to the notice, its oral submissions and even certain additional submissions the RBI came to a conclusion that “charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty”. Thus, imposing a Rs. 10 Lakh fine on Muthoot Finance, Ernakulam.
Manappuram showed a similar timeline as well, yielding similar results on the way. The RBI said In both the cases, the punitive action against the companies is founded on deficiencies in their regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers.