New Delhi, Sep 26 The Reserve Bank of India (RBI) on Friday said that it has imposed a monetary penalty of Rs 2.70 lakh on Muthoot FinCorp Limited for failing to comply with regulatory directions related to its Internal Ombudsman mechanism.
The penalty was levied under provisions of the Reserve Bank of India Act, 1934, following a statutory inspection of the company’s financial position as of March 31, 2024.
“The RBI has imposed a monetary penalty of Rs 2.70 lakh on Muthoot FinCorp Limited (the company) for non-compliance with directions issued by RBI on ‘Internal Ombudsman’,” the central bank said in an official statement.
RBI had issued a show-cause notice to the company after identifying non-compliance during the inspection and related correspondence.
“The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2024,” RBI said.
“Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions,” the central bank added.
After reviewing the company’s written and oral submissions during a personal hearing, the RBI found that Muthoot FinCorp had not established a system for automatic escalation of complaints that were partly or wholly rejected by the company’s internal grievance redress mechanism to the Internal Ombudsman.
“The company failed to establish a system of auto escalation of complaints that were partly or wholly rejected by the company’s internal grievance redress mechanism to its Internal Ombudsman,” RBI added.
The central bank clarified that the penalty relates solely to regulatory compliance deficiencies and does not question the validity of any transactions or agreements between the company and its customers.
RBI also noted that the penalty does not preclude any further action that may be taken against the company.
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