RBI Slaps Rs 20 Lakh Fine On Manappuram Finance For Non-Compliance Of Key Norms

The Reserve Bank of India imposed a monetary penalty of Rs 20 lakh on Manappuram Finance Limited for non-compliance with certain norms, the central bank said in a press release.

The central bank imposed this fine on two accounts as the non-banking finance company failed to undertake verification of PAN of customers from the verification facility of the issuing authority at the time of customer acceptance.

Separately, it allotted multiple identification codes to certain customers instead of a unique customer identification code for each customer.

On March 31, 2023, the RBI conducted a statutory inspection of the company. After considering the company’s reply to RBI's show cause notice and oral submissions made by it during the personal hearing, RBI decided to impose these charges.

This action has come as the RBI has been asking banks and non-bank lenders to update their Know Your Customer norms. Last month, RBI Deputy Governor Swaminathan J had told bank boards to ensure that the KYC norms are followed amid a rise in complaints about flouting these regulations.

Swaminathan had said the central bank would not hesitate to take regulatory or supervisory actions against entities that fail to address these concerns in a timely and considerate manner.

He urged lenders to establish policies and adopt standard operating procedures that are not only compliant with regulatory guidelines but also practical for effective implementation.

While the RBI has comprehensively updated the master directions on the KYC in full alignment with the Financial Action Task Force and the Prevention of Money Laundering Act requirements, the way in which the guidelines are being implemented seems to be resulting in a number of accounts getting frozen, denying customers access to their funds, according to Swaminathan.