RBI imposes Rs 5 lakh penalty on Muthoottu Mini Financiers

MUMBAI: RBI today said it has imposed a penalty of Rs 5 lakh on Muthoottu Mini Financiers for violation of various regulatory norms, including guidelines on loan to value (LTV) ratio pertaining to gold loans.

The central bank said an inspection of the company with reference to its financial position as of March 31, 2013, was conducted in December 2013.

"It was observed that several regulatory violations were committed by the company relating to the guidelines on LTV ratio pertaining to gold loans, issuance and renewal of NCDs, loans against NCDs, adherence to Fair Practices Code (FPC), disclosures in the balance sheet etc," it said in a release.

On account of various contraventions to RBI directions as pointed out in the inspection, the company was issued a show-cause notice (SCN) on July 25, 2014, for imposition of penalty.

RBI said the company's response to the SCN was not found to be satisfactory. The company was further accorded a personal hearing by RBI.

"After considering the facts of the case and the company's reply... RBI came to the conclusion that the violations as observed during inspection were of serious nature and were substantiated, which warranted imposition of monetary penalty on the company.

"Accordingly, a penalty of Rs 5 lakh has been imposed on the company," RBI added.