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Anytime News Network | Pooja Srivastava
Leading non-banking financial company Manappuram Finance Limited has come under regulatory fire after Reserve Bank of India (RBI) imposed a monetary penalty of ₹2.70 lakh for violating key compliance norms related to executive compensation. The action has raised fresh concerns about governance standards and regulatory discipline within the NBFC sector.
According to RBI, the company failed to comply with the central bank’s guidelines on compensation of Key Managerial Personnel (KMP), particularly the rule that requires a portion of variable pay to be deferred rather than paid immediately. However, Manappuram Finance reportedly paid the entire variable component upfront to certain senior executives, bypassing the mandatory deferment mechanism prescribed by the regulator.
The violation surfaced during RBI’s statutory inspection of the company based on its financial position as of March 31, 2025. Following the inspection, the central bank issued a show-cause notice asking the company to explain why penal action should not be taken for non-compliance with regulatory directions.
Although the company submitted its written response and made oral submissions during a personal hearing, RBI concluded that the charges were substantiated. Consequently, the penalty was imposed under the provisions of the Reserve Bank of India Act, 1934, specifically under sections dealing with regulatory enforcement against financial entities that fail to adhere to prescribed norms.
The central bank clarified that the action strictly relates to deficiencies in regulatory compliance and does not question the validity of any transaction or agreement between the company and its customers. At the same time, RBI indicated that the penalty does not preclude the possibility of further action if additional lapses are identified.
Industry observers say the move sends a strong message to NBFCs that governance failures and deviations from compensation norms will not be overlooked. The case also highlights the increasing scrutiny of executive pay structures in financial institutions, especially when they conflict with regulatory safeguards designed to ensure accountability and long-term financial stability.
