Daijiworld Media Network - Mumbai

Mumbai, Jul 17: The Reserve Bank of India (RBI) has imposed monetary penalties on Muthoot Finance Limited and Muthoot Vehicle and Asset Finance Limited for failing to comply with the central bank's Know Your Customer (KYC) guidelines.

According to an RBI statement issued on Friday, Muthoot Finance Limited has been fined Rs 5.80 lakh, while Muthoot Vehicle and Asset Finance Limited has been penalised Rs 2.70 lakh for regulatory violations.

The central bank said the action against Muthoot Finance followed a statutory inspection conducted with reference to the company's financial position as of March 31, 2025. Based on supervisory findings, the RBI issued a show-cause notice seeking an explanation for the alleged non-compliance with its KYC directions.

After reviewing the company's written response and oral submissions during a personal hearing, the RBI concluded that Muthoot Finance had failed to establish a system for periodic review of customers' risk categorisation. It also found that the company had not implemented a robust software system for effectively identifying and reporting suspicious financial transactions.

A similar inspection was conducted for Muthoot Vehicle and Asset Finance Limited, following which the RBI also issued a show-cause notice over regulatory lapses.

The central bank said that after examining the company's response, it found that the firm had failed to carry out periodic reviews of customer risk categorisation at the prescribed interval of at least once every six months, as required under RBI guidelines.

The RBI clarified that the penalties relate solely to shortcomings in regulatory compliance and should not be interpreted as questioning the validity of any transactions or agreements entered into by the companies with their customers.

The central bank further stated that the monetary penalties are without prejudice to any additional regulatory action that may be initiated against the companies in accordance with applicable laws.