RBI imposes monetary penalty on Manappuram Finance Limited

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.42.78 lakh on Manappuram Finance Limited, Thrissur (the company) for non-compliance with certain provisions of the “Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016”.

RBI conducted a statutory inspection of the company with reference to its financial position as of March 31, 2022, and examination of the Risk Assessment Report, Inspection Report, supervisory letter, and all related correspondence revealed, among other things, the company’s failure to comply with the RBI’s directions on payment to certain borrowers of surplus amounts realised by auction of gold articles pledged by those borrowers during the period.

As a result, the company was served with a notice requiring it to show cause why a penalty should not be levied for failing to comply with the RBI’s orders, as specified therein.

After reviewing the company’s response to the notice, additional submissions made by it, and oral submissions made during the personal hearing, the RBI determined that the charge of non-compliance with the aforementioned RBI directions was substantiated and warranted the imposition of monetary penalty.

This penalty has been imposed in exercise of powers conferred on RBI under the provisions of clause (b) of sub-section (1) of Section 58 G read with clause (aa) of sub-section (5) of Section 58 B of the Reserve Bank of India Act, 1934.

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers.