Manappuram Finance Limited has been penalized by the Reserve Bank of India (RBI) with a monetary penalty of ₹2.70 lakh. This action stems from non-compliance observed during a statutory inspection for FY 2024-25 concerning the ‘deferral of variable pay’ for two Key Managerial Personnel (KMPs). The company has since revised its remuneration policy to align with RBI directives and is recovering the deferred variable pay amount.
Regulatory Action Regarding Compensation Practices
Manappuram Finance Limited disclosed that the Reserve Bank of India (RBI) has imposed a monetary penalty amounting to Rs 2.70 lakh (Rupees Two Lakh Seventy Thousand only) on the company. This penalty relates to non-compliance with RBI directions concerning the ‘deferral of variable pay’ for two Key Managerial Personnel (KMPs) during the financial year FY 2024-25.
Details of the Non-Compliance
The issue was identified during a statutory inspection conducted by the RBI for FY 2024-25. Specifically, the authority observed that the company had paid the entire variable pay upfront to two KMPs without implementing the mandatory deferral portion, which contravenes RBI guidelines set for Non-Banking Financial Companies (NBFCs) regarding compensation for KMPs and senior management personnel (SMPs).
Company Response and Corrective Actions
In response to the findings, the Company has undertaken significant steps:
- The Company reviewed and revised its remuneration framework and policy to incorporate mandatory deferral of variable pay for KMPs and SMPs, aligning fully with RBI directions.
- This revised policy, which includes malus and clawback provisions, was approved by the Nomination and Remuneration Committee and the Board.
- The Board further decided to retroactively apply these provisions to the variable pay already disbursed for FY 2024-25 to the concerned two KMPs.
- The deferred portion of the variable pay is currently being recovered in instalments from those two KMPs.
Financial Impact Assessment
Manappuram Finance Limited has confirmed that the monetary penalty of Rs 2.70 lakh imposed by the RBI is not expected to have any material impact on the company’s financials, operations, or other activities.
Source: BSE
