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Business News/ Companies / News/  RBI imposes 20 lakh penalty on Manappuram Finance. Details here
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RBI imposes ₹20 lakh penalty on Manappuram Finance. Details here

The Reserve Bank of India has fined Manappuram Finance ₹20 lakh for failing to classify certain gold loan accounts with overdues of more than 90 days as NPA

This is not the first time the central bank has imposed a penalty on the NBFC. (MINT)Premium
This is not the first time the central bank has imposed a penalty on the NBFC. (MINT)

The Reserve Bank of India has imposed 20 lakh monetary penalty on Manappuram Finance for non-compliance with certain provisions of Non Banking Financial Company (NBFC). The RBI imposed this penalty on the NBFC as it did not classify certain gold loan accounts with overdues of more than 90 days as Non-Performing Assets (NPAs).

The RBI issued a press statement in this regard citing, "The Reserve Bank of India (RBI) has, by an order dated June 12, 2023, imposed a monetary penalty of 20.00 lakh (Rupees Twenty lakh only) 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". This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 58G (1) (b) read with section 58B (5) (aa) 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," the RBI added.

Giving backgrounder to this 20 lakh penalty imposed on Manappuram Finance, the RBI said that the statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2021 and examination of the Risk Assessment Report, Inspection Report, supervisory letter and all related correspondence pertaining to the same revealed, inter alia, non-compliance with the aforesaid directions by the company to the extent (i) it did not classify certain gold loan accounts with overdues of more than 90 days as Non-Performing Assets (NPAs), and (ii) it did not ensure maintenance of the mandated Loan-to-Value (LTV) ratio in certain gold loan accounts during FY 2020-21. In furtherance to the same, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the RBI directions, as stated therein.

"After considering the company’s reply to the notice, examination of additional submissions made by it and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty," RBI concluded.

This is not the first time when RBI has imposed penalty on Manappuram Finance Limited. In November 2020, the central bank of India had imposed 5 lakh penalty on the NBFC for non-compliance with directions issued by RBI on verification of ownership of gold jewellery, contained in Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.

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ABOUT THE AUTHOR
Asit Manohar
Chief Content Producer at Live Mint Digital Team
Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
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Published: 17 Jun 2023, 06:35 AM IST
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