Reserve Bank of India Imposes ₹2.70 Lakh Penalty on Manappuram Finance Limited for Regulatory Non-Compliance
The Reserve Bank of India (RBI) has levied a monetary penalty of ₹2.70 lakh on Manappuram Finance Limited for failing to comply with regulatory guidelines related to the deferral of variable pay for key managerial personnel (KMPs) during the financial year 2024–25.
Details of the Regulatory Action
The RBI issued a speaking order on March 9, 2026, highlighting the company’s non-compliance with the central bank’s remuneration guidelines. The order was subsequently communicated to the company via email on March 13, 2026.
According to the regulator, the company paid the full variable remuneration upfront to two key managerial personnel, instead of deferring a portion of the payment as required under RBI’s compensation framework.
This violation resulted in the imposition of the ₹2.70 lakh penalty under the provisions of the Reserve Bank of India Act, 1934, specifically Section 58G(1)(b) read with Section 58B(5)(aa).
Financial Impact on the Company
The penalty amount is relatively small and is not expected to materially affect the financial performance or operations of Manappuram Finance Limited.
However, the development underscores the importance of strict adherence to regulatory norms governing compensation structures for senior executives in regulated financial institutions.
Steps Taken to Address the Issue
Following the RBI’s directive, the company has updated its remuneration policy to fully comply with the central bank’s guidelines.
The revised policy now includes:
- Mandatory deferral of variable pay for Key Managerial Personnel (KMPs) and Senior Management Personnel (SMPs)
- Malus provisions, allowing reduction of deferred compensation in case of performance issues
- Clawback clauses, enabling recovery of compensation under specified circumstances
The updated policy has been approved by the Nomination and Remuneration Committee and the company’s Board of Directors.
Recovery of Previously Paid Compensation
In addition, the company has started recovering the deferred portion of the variable pay already disbursed for FY 2024–25 to the concerned KMPs.
The recovery is being carried out in instalments, ensuring alignment with the revised compensation framework and RBI guidelines.
Summary
The Reserve Bank of India has imposed a ₹2.70 lakh penalty on Manappuram Finance Limited for failing to comply with guidelines on deferring variable pay for key managerial personnel in FY25. The violation occurred after the company paid the entire variable compensation upfront to two executives. In response, the company has revised its remuneration policy, introduced deferred pay structures with malus and clawback clauses, and initiated the recovery of previously paid variable compensation to ensure full compliance with RBI regulations.
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