RBI Penalises Muthoot Finance, Muthoot Vehicle and Asset Finance For KYC Lapses

The Reserve Bank of India (RBI) has imposed a Rs. 5.80 lakh penalty on Muthoot Finance Limited for non-compliance with certain Know Your Customer (KYC) directions issued by the RBI.

The penalty was imposed through an order dated July 10, 2026.

According to the RBI, the company had failed to put in place a system for periodic review of the risk categorisation of accounts. The company had also not implemented a robust software system for the effective identification and reporting of suspicious transactions.

In a separate order dated July 13, the RBI also took a similar action against Muthoot Vehicle and Asset Finance Limited by levying a Rs. 2.70 lakh penalty. It found that,

“The company failed to put in place a system of periodic review of risk categorisation of accounts, with such periodicity being at least once in six months.”

It was clarified that the penalties relate only to shortcomings in regulatory compliance and do not affect the validity of any customer transaction or agreement.

The regulator further stated that the penalties were without prejudice to any other action that may be initiated against the entities.

Click here to read the circular on the RBI's penalty on Muthoot Finance Limited

Click here to read the circular on the RBI's penalty on Muthoot Vehicle and Asset Finance Limited