RBI imposes monetary penalty on Manappuram Finance for KYC non-compliance

The Reserve Bank of India has imposed a monetary penalty of Rs 20 lakh on Manappuram Finance Ltd for non-compliance with the provisions of the Reserve Bank of India (Know Your Customer (KYC)) Direction, 2016.

"The Reserve Bank of India (RBI) has, by an order dated December 16, 2024, imposed a monetary penalty of Rs 20,00,000/- (Rupees Twenty Lakh only) on Manappuram Finance Limited (the company) for non-compliance with certain provisions of “Reserve Bank of India (Know Your Customer (KYC)) Direction, 2016” issued by RBI," the apex bank said.

The order, dated December 16, 2024, followed a statutory inspection of the company’s financial position as of March 31, 2023. The inspection revealed significant lapses in compliance with RBI’s KYC norms.

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These included failure to verify the Permanent Account Number (PAN) of customers through the issuing authority’s verification facility at the time of customer acceptance. Additionally, Manappuram Finance allocated multiple identification codes to certain customers instead of adhering to the requirement of assigning a Unique Customer Identification Code (UCIC) for each.

The penalty was imposed under the powers granted to RBI by the Reserve Bank of India Act, 1934, after considering the company's response to a show-cause notice and its oral submissions during a personal hearing.

"This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company," RBI said.

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