Muthoot Finance Cash Disbursals Was For Customer Ease, Not To Breach RBI Rules: MD
There has been no violation of the income tax act from the company's side. It's just that the RBI's guidelines weren't clear, George Alexander Muthoot said.
Muthoot Finance Ltd. was doing cash disbursals solely for customer ease and not to breach any Reserve Bank of India's rules, said Managing Director George Alexander Muthoot.
"It's just a convenience to customers, that is all. Some customers ask but not everyone is taking above Rs 20,000 in cash, etc. No way. Above Rs 2 lakh is always by cheque; some people request, we give it by cash. So now, they have clarified it shouldn't be done, it won't be done," he told NDTV Profit.
Since this has stopped, it might cause inconvenience to some customers, who might go to unorganised moneylenders, he said. "All customers transfer money through bank only nowadays... It is just some inconvenience to customers."
Muthoot's clarification comes in response to RBI sending a letter to several non-banking financial companies, warning them against disbursing cash loans in excess of the permissible limit of Rs 20,000.
There has been no violation of the income tax act from the company's side. It's just that the RBI's guidelines weren't clear, Muthoot said. "...The guidance from RBI weren't clear and that is why they created confusion. RBI has now clarified that all these Rs 20,000 should be given by bank transfers only."
The central bank has written to all NBFCs and not just to Muthoot Finance, he said.
Muthoot said that there will be no impact whatsoever on the business.
