The Reserve Bank of India (RBI) has levied fines on Muthoot Finance Limited and Muthoot Vehicle and Asset Finance Limited for failing to comply with the RBI’s Know Your Customer (KYC) guidelines. Muthoot Finance Limited faces a penalty of Rs 5.80 lakh, while Muthoot Vehicle and Asset Finance Limited have been fined Rs 2.70 lakh. The penalties were imposed after a statutory inspection revealed non-compliance with RBI directives as of March 31, 2025.
The RBI’s scrutiny found that both companies lacked a system for periodic review of account risk categorization and failed to implement effective software for identifying and reporting suspicious transactions. Following the inspection, notices were issued to the companies, prompting them to explain why penalties should not be imposed for the regulatory breaches. Despite responses and hearings, the RBI determined that the companies had not met the required standards.
In response to the violations, the RBI clarified that the penalties were imposed solely due to regulatory compliance shortcomings and did not question the validity of any transactions with customers. The monetary fines do not preclude further actions that the RBI may take against the companies in the future.
