Reserve Bank of India has levied a monetary penalty of ₹2.70 lakh on Manappuram Finance Limited for non-compliance with regulatory guidelines on the deferral of variable compensation for key managerial personnel (KMPs).
Details of the Regulatory Action
The penalty was imposed through an order dated March 9, 2026, and subsequently communicated to the company on March 13, 2026. The action pertains to the financial year 2024–25.
During its supervisory assessment, the central bank observed that the company had disbursed the entire variable pay to certain KMPs without adhering to the mandated deferral requirements. As per RBI guidelines, a portion of variable compensation for senior personnel must be deferred to align incentives with long-term performance and risk management.
The penalty has been imposed under the relevant provisions of the Reserve Bank of India Act, 1934.
Nature of Non-Compliance
The regulator identified that:
- Variable pay for two KMPs was paid in full without deferral
- The company did not comply with prescribed compensation structuring norms
This deviation from regulatory expectations led to the enforcement action.
Financial Impact and Corrective Measures
The company has indicated that the penalty amount is not material in terms of its financial position or operational performance.
In response, Manappuram Finance has undertaken corrective steps to strengthen compliance:
- Revised its remuneration policy to incorporate mandatory deferral of variable pay
- Extended the framework to include both KMPs and senior management personnel (SMPs)
- Introduced malus and clawback provisions to ensure accountability
- Initiated recovery of the deferred portion of FY25 variable pay from the concerned executives in a phased manner
The updated policy has been approved by the Nomination and Remuneration Committee as well as the Board.
Summary
- RBI imposed a ₹2.70 lakh penalty on Manappuram Finance
- Action relates to non-compliance with KMP variable pay deferral norms for FY25
- Company paid full variable compensation upfront to two KMPs
- Penalty issued under provisions of the RBI Act, 1934
- No material financial impact expected
- Company has revised its remuneration policy and introduced deferral, malus, and clawback provisions
- Recovery of excess paid variable compensation is underway
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