Manappuram Finance has received a monetary fine of 20 lacks from the Reserve Bank of India for failing to comply with several NBFC regulations. Due to the NBFC’s failure to identify some gold loan accounts with overdue of more than 90 days as non-performing assets (NPAs), the RBI levied this fine on the NBFC.
RBI on penalising Manappuram Finance
The Reserve Bank of India (RBI) 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,” according to a press release the RBI issued in this regard. This fine was levied in accordance with the authority granted to the RBI under Sections 58G (1) (b) and 58B (5) (aa) of the Reserve Bank of India Act, 1934.
The RBI continued, “This action is based on regulatory compliance problems and is not meant to rule on the legality of any transaction or arrangement entered into by the firm with its consumers.
Background information on the 20 lakh rupee ($20, 000) fine imposed on Manappuram Finance was provided by the RBI. It stated that the statutory inspection of the company was carried out by the RBI with reference to its financial position as of March 31, 2021, and that examination of the Risk Assessment Report, Inspection Report, supervisory letter, and all related correspondence pertaining to the same revealed, among other things, non-compliance with the aforesaid directions by the company to the extent (i) it did
A notification was sent to the firm in response to this, instructing it to provide justification as to why a fine should not be levied for failing to follow the RBI’s stated instructions.
RBI came to the conclusion that the charge of failure to comply with the aforementioned RBI directions was substantiated and warranted imposition of a monetary penalty after taking into account the company’s response to the notice, examining additional submissions made by it, and listening to oral arguments made during the personal hearing.
Manappuram Finance Limited has received penalties from the RBI before. The Indian central bank fined the NBFC 5 lakh in November 2020 for failing to follow RBI guidelines from the Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 regarding the verification of ownership of gold jewelry.
