RBI Penalizes Muthoot FinCorp for Non-Compliance

The Reserve Bank of India (RBI) has levied a penalty of Rs 2.7 lakh on Muthoot FinCorp Limited, citing non-compliance with established norms regarding its 'Internal Ombudsman' function. This decision comes after a thorough statutory inspection was conducted by the central bank, referencing the company's financial position as of March 31, 2024.

Following the inspection, supervisory findings highlighted Muthoot FinCorp's failure to adhere to RBI directions. Consequently, the company received a notice to justify why a penalty should not be enforced for such failures, as per RBI's statement on Friday.

After evaluating Muthoot FinCorp's written and oral defenses, the RBI maintained the charge of non-compliance. The central issue was the company's inability to implement an automatic escalation system for complaints, especially those either partly or entirely rejected by its internal grievance redress mechanism, to its Internal Ombudsman. The penalty is aimed at addressing regulatory lapses without impacting Muthoot FinCorp's agreements with customers. RBI stated that this monetary penalty does not preclude further actions that it might undertake against the company.

(With inputs from agencies.)