Reserve Bank of India imposes monetary penalty on Muthoot Finance Limited
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹10 lakh on Muthoot Finance Limited, Ernakulam, for non-compliance with RBI directions relating to maintenance of the Loan-to-Value ratio in gold loans and obtaining a copy of the borrower’s PAN card for gold loans above ₹5 lakh. The penalty was imposed under section 58G(1)(b) read with section 58B(5)(aa) of the RBI Act, 1934, after inspection findings and consideration of the company’s response and submissions.
RBI imposed a monetary penalty under section 58G(1)(b) read with section 58B(5)(aa) of the RBI Act, 1934 after its inspection found that Muthoot Finance Limited had not complied with RBI directions on maintenance of Loan to Value ratio in gold loans and on obtaining a copy of the borrower’s PAN card while granting gold loans in excess of ₹5 lakh. RBI concluded that the charges were substantiated after considering the company’s reply, oral submissions, and additional submissions.
Severity Assessment
A ₹10 lakh penalty falls in severity band 3; the action is a monetary penalty with no additional operational restriction.
Muthoot Finance Limited must absorb the monetary penalty and ensure future compliance with RBI’s gold-loan directions, including LTV maintenance and PAN collection requirements. The release does not describe any business restriction or licence action, so the forward-looking impact is limited to compliance expectations and the penalty payment.
Published as Muthoot Finance Limited
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