The Enforcement Directorate (ED) on Thursday questioned Muthoot Group Managing Director George Alexander Muthoot in connection with an alleged money laundering and investor fraud investigation. The interrogation took place at the agency’s Kochi office, according to sources quoted by PTI.
PMLA Case Stemming from Multiple FIRs
The ED’s Kochi zonal unit initiated a probe under the Prevention of Money Laundering Act (PMLA), based on several First Information Reports (FIRs) registered by the Kerala Police. These FIRs followed complaints that certain Muthoot Finance branch managers had allegedly misrepresented investment schemes to customers.
As per the complaints, investors were “lured” into investing in fixed deposits (FDs) and non-convertible debentures (NCDs) with promises of 8–12% returns. The accused branch managers allegedly diverted the funds to Srei Equipment Finance Limited, falsely presenting it as a sister concern of the Muthoot Group.
This alleged misrepresentation reportedly led to non-repayment of investments on maturity, leaving several investors claiming they had been defrauded.
ED Records Statement of Muthoot MD
Sources confirmed that the ED summoned George Alexander Muthoot to depose in the case, where his statement was formally recorded. The probe remains ongoing, with investigators examining the flow of funds and the extent of managerial oversight involved in the transactions.
RBI Slaps ₹2.7 Lakh Penalty on Muthoot FinCorp
In a separate development, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹2.7 lakh on Muthoot FinCorp on September 26 for non-compliance with norms regarding the appointment and functioning of an Internal Ombudsman.
According to the RBI, a statutory inspection (as of March 31, 2024) found that Muthoot FinCorp failed to establish an automated system to escalate complaints—either partially or wholly rejected by its grievance mechanism—to the Internal Ombudsman.
The central bank clarified that the penalty pertains solely to regulatory deficiencies and does not affect the validity of any transactions or agreements between Muthoot FinCorp and its customers.
