RBI imposes Rs 20 lakh fine on Manappuram Finance NBFC norms violation

The Reserve Bank has imposed a penalty of Rs 20 lakh on Manappuram Finance for non-compliance with certain provisions of the NBFC norms.

This penalty on the Thrissur-based gold loan company, which by AUM is the second largest such pure-play lender, 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 central bank said on Friday.

The Reserve Bank of India (RBI) conducted a statutory inspection of the company concerning its financial position as of March 2021, and an examination of the risk assessment report, inspection report, supervisory letter, and all related correspondence pertaining to the same, had revealed non-compliance with the aforesaid directions to the extent it did not classify certain gold loan accounts with over-dues of more than 90 days as non-performing assets.

It also did not ensure maintenance of the mandated loan-to-value ratio in certain accounts during FY21.

Further, the regulator said the penal action is based on the unsatisfactory response from the company.