RBI imposes monetary penalty on Muthoot Finance Limited
By order dated July 15, 2024, the Reserve Bank of India (RBI) fined Muthoot Finance Limited (the company) Rs. 1,90,000/- (Rupees One Lakh Ninety Thousand only) for failing to comply with certain requirements of the RBI’s “Know Your Customer (KYC) Directions, 2016.” The Reserve Bank of India Act, 1934’s clause (b) of sub-section (1) of section 58G read in conjunction with clause (aa) of sub-section (5) of section 58B, grant the RBI the authority to impose this punishment.
The RBI carried out the company’s statutory inspection while considering its financial standing as of March 31, 2022. A notification was sent to the company instructing it to provide justification for why a penalty should not be levied on it for its noncompliance with the RBI directions, based on supervisory findings of non-compliance and accompanying correspondence.
After taking into account the notice, the company’s response, and its oral submissions during the in-person hearing, the RBI concluded, among other things, that the charge of assigning multiple Unique Customer Identification Codes (UCIC) to distinct customers was upheld and called for the imposition of a financial penalty.
This action is not meant to rule on the legality of any transactions or agreements the company has with its clients; rather, it is based on regulatory compliance problems. Furthermore, the RBI reserves the right to take further action against the corporation in addition to this financial penalty.
