The Reserve Bank of India (RBI) has imposed a penalty of Rs 20 lakh (2 million Indian rupees) on Manappuram Finance for non-compliance with certain provisions of the Non-Banking Financial Company (NBFC) norms.
Penalty for Non-Compliance:
The RBI announced the penalty after identifying Manappuram Finance’s failure to comply with the following norms:
- Non-compliance with the Know Your Customer (KYC) norms: its lacked adequate systems and procedures to verify the identity and address of its customers.
- Non-compliance with the norms on classification of assets: They did not classify its assets in accordance with the guidelines set by the RBI.
- Non-compliance with the norms on provisioning: They failed to make adequate provisions for its non-performing assets.
RBI’s Exercise of Powers:
The penalty was imposed under the provisions of Section 47A of the RBI Act, 1934, granting the bank the authority to take necessary actions.
Bank’s Profile:
Manappuram Finance is a prominent NBFC in India, specializing in gold loans and microfinance loans. With a wide network of over 2,500 branches across the country and a workforce of more than 25,000 employees, the company plays a significant role in the financial sector.
Importance of Compliance:
The RBI’s penalty against Manappuram Finance serves as a reminder to all NBFCs to adhere to the regulatory guidelines prescribed by the RBI. Non-compliance with these regulations can lead to penalties, potentially impacting the operations and reputation of NBFCs.
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