RBI has imposed penalty of Rs.10 lakh on Muthoot Finance, Ernakulam, for non-compliance with the directions on maintaining loan to value ratio and on obtaining copy of PAN card of the borrower while granting gold loans of over Rs.5 lakh.

As reported by PTI, the central bank has also imposed a penalty of Rs.5 lakh on Manappuram Finance, Thrissur for non-compliance with directions on verification of ownership of gold jewellery.

Talking about Muthoot Finance, the central bank said the statutory inspection of the company with reference to its financial position as on March 31, 2018 and March 31, 2019, revealed non-compliance with directions issued by it. RBI had also issues a notice earlier advising the company to show cause as to why penalty should not be imposed for failure to comply with the directions issues by it.
However, after looking at the company’s reply to the notice, oral submissions and examinations of additional submissions made by it, RBI sustained the charge of non-compliance with RBI directions and warranted imposition of monetary penalty.

The case was similar with Manappuram Finance, where RBI said statutory inspection of company with reference to its financial position as on March 31, 2019, revealed non-compliance with the directions issued by it. RBI had also issued notice to Manappuram Finance and after considering the company’s reply, oral submissions and examination of additional submissions made by it, RBI sustained the charges of non-compliance and warranted imposition of monetary penalty.

RBI said that in both the cases, the action against the companies is based on 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.