The Reserve Bank of India (RBI) on Thursday imposed penalties of Rs 10 lakh and Rs 5 lakh on Muthoot Finance and Manappuram Finance respectively, for norm violations. The central bank has penalised Muthoot Finance Limited for non-compliance with directions issued by RBI on maintenance of loan-to-value ratio in gold loans and on obtaining copy of PAN card of the borrower while granting gold loans in excess of Rs 5 lakh, contravening RBI norms.

An RBI statement said that a statutory inspection of Muthoot Finance with reference to its financial position as on March 31, 2018 and March 31, 2019, revealed non-compliance with the above-mentioned directions issued by RBI. Further, a notice was issued to the company advising it to show cause as to why penalty should not be imposed for failure to comply with the directions issued by RBI.

"After considering the company's reply to the notice, oral submissions made during the personal hearings and examination of additional submissions made by it, RBI concluded that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty," it said.

Manappuram Finance has been fined for non-compliance with directions issued by RBI on verification of ownership of gold jewellery. An inspection of Manappuram Finance with reference to its financial position as on March 31, 2019, showed that it has not complied with the directions issued by RBI, said another statement in reference to Manappuram Finance.

"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 with its customers," RBI said in separate statements.