The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 3.10 lakh on Muthoot MCred Limited, formerly known as Muthoottu Mini Financiers Limited, for non-compliance with regulatory directions relating to asset classification.

The penalty was imposed through an order dated August 14, 2026, following a statutory inspection of the company conducted with reference to its financial position as of March 31, 2025.

According to the RBI, the company had upgraded certain loan accounts classified as non-performing assets (NPAs) to ‘Standard’ status without receiving full repayment of outstanding interest and principal dues across all credit facilities.

The central bank said the penalty followed a review of the company’s response to the show-cause notice, additional submissions and oral representations made during a personal hearing.

RBI clarified that the action is related to regulatory compliance deficiencies and does not question the validity of transactions or agreements entered into by the company with its customers. The penalty is also without prejudice to any other action that may be initiated against Muthoot MCred.