Why the Enforcement Directorate is looking into investor grievances related to the Muthoot group’s sale of Srei bonds
Investors allege Muthoot employees mis-sold them Srei bonds. Muthoot calls the allegation baseless. The ED takes note of police complaints.
The managing director of India’s largest gold loan company Muthoot Finance, George Alexander Muthoot, was recently summoned by India’s federal money laundering investigation authority Enforcement Directorate (ED). A news report by PTI on 11 October said that Muthoot was questioned following police complaints filed by investors for allegedly luring investors with the promise of high returns. The company has dismissed the allegations as “false, baseless and misleading". Mint takes a look at what this case is all about and how a Kolkata-based group is at the centre of this battle between investors and the Muthoot Group.
Why are the investors incensed?
The issue dates back to 2018, when Muthoot Securities sold non-convertible debentures of Kolkata-based Srei Equipment Finance Ltd. Mint had reported in May 2023 how a group of 49 investors who together invested ₹10.2 crore in these bonds alleged that Muthoot Group employees had mis-sold these bonds, passing them off as bonds from a sister company. These investors say that they found out their money was in a Kolkata-based company only after the principal and interest were not paid after maturity, some as late as the end of end-2022, a year after Srei was admitted to insolvency. These two Srei group companies—Srei Equipment Finance and Srei Infrastructure Finance—were taken over by the so-called bad bank National Asset Reconstruction Co. Ltd (NARCL) in 2023.
What has happened since?
According to Muthoot Finance, NARCL has commenced partial payments to NCD holders. In a stock exchange filing on 11 October, the lender said that after the settlement terms were approved by the National Company Law Tribunal, investors began receiving part of their investment in installments. “It is understood that several NCD investors have already received part payments directly to their registered bank accounts. The most recent receipt was on 23 September 2025." Mint reached out to investors to check how much they have received so far. Molly Mohan, an investor from New Delhi, said she had invested ₹5 lakh each in the name of her two sons and has so far received ₹22,000. Meanwhile, 61-year-old Susan Mathew, another investor from New Delhi, is slightly more fortunate and has received ₹7 lakh so far against her investment of ₹34.7 lakh. Both spoke over the phone and told Mint that they were misled by Muthoot group executives.
Why is the Enforcement Directorate involved?
According to the PTI report cited earlier, the Kochi zonal unit of the ED filed a case under the Prevention of Money Laundering Act (PMLA), taking cognizance of a clutch of FIRs lodged by the Kerala Police. The police complaints, PTI said, allege that the accused, primarily Muthoot Finance branch managers, promised investors returns of 8-12% on certain fixed deposits and NCDs, but "diverted" the funds to Srei Equipment Finance. Muthoot Finance has denied these allegations, calling them “false, baseless and misleading". Its exchange filing said that investors had signed application forms which named the Srei companies and interest rate offered and thereafter signed cheques drawn in favour of specified escrow accounts operated by lead managers, registrar to the issue, Srei companies and the collection bank.
Mint has seen a copy of one of the FIRs which was registered in Kerala's Thiruvalla police station in August 2023 against a director of the Muthoot group, a branch manager, along with Srei Equipment Finance. Meanwhile, Mathew said that ED officials have reached out to her about the case after several FIRs were filed in Kerala. “I wasn’t able to go to Kerala to submit my statement, but an official from ED has been in touch, and we are hoping that finally, justice will be done and our money will be returned," said Mathew.
What is Muthoot saying about investor allegations?
A spokesperson for Muthoot Finance told Mint on Wednesday that the managing director "was called upon by the ED only to provide clarifications and factual information, and Muthoot Finance has extended full cooperation to the authorities." It added that it "categorically denies any allegations of wrongdoing by Muthoot Finance or its officials."
Separately, the group told the stock exchanges that Muthoot Securities Ltd (MSTL), a stock broking company, was one of the brokers in the public issue of Srei NCDs. The promoter family of Muthoot Finance holds 82% shareholding and Muthoot Finance holds the remaining 18% in Muthoot Securities. It said the Muthoot Group employees were allowed to source leads from their interested customers. According to the statement, investors had independently applied for the NCDs issued by Srei in their own capacity through the broking network of Muthoot Securities. “The investors submitted application(s) in the name of respective Srei Cos duly signed by the respective investor. No funds were collected, handled, or routed through Muthoot Finance Ltd in any manner whatsoever."
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