Kochi, October 11: The Enforcement Directorate (ED) on Thursday questioned Muthoot Group Managing Director George Alexander Muthoot in connection with an ongoing probe into alleged money laundering and investor fraud. The questioning took place at the agency’s Kochi office, according to sources cited by PTI.
PMLA Probe Based on Multiple FIRs
The ED’s Kochi zonal unit has launched an investigation under the Prevention of Money Laundering Act (PMLA), based on several First Information Reports (FIRs) filed by the Kerala Police.
These FIRs stem from allegations that certain branch managers of Muthoot Finance misrepresented investment schemes to customers, leading to significant financial losses for investors.
According to complaints, investors were enticed into placing funds in fixed deposits (FDs) and non-convertible debentures (NCDs) with promises of 8–12% returns. The accused managers allegedly diverted these funds to Srei Equipment Finance Limited, falsely claiming it was a sister concern of the Muthoot Group.
This alleged misrepresentation resulted in non-repayment of investments on maturity, with several investors claiming they were cheated out of their funds.
ED Records Statement of George Alexander Muthoot
Sources confirmed that the ED summoned George Alexander Muthoot to record his statement in the case. The agency is reportedly examining the flow of funds and the level of managerial oversight involved in the questioned transactions.
The investigation remains ongoing, with the ED expected to scrutinize whether systemic lapses or individual misconduct contributed to the alleged fraud.
RBI Imposes Penalty on Muthoot FinCorp
In a separate regulatory action, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹2.7 lakh on Muthoot FinCorp on September 26, 2024, for non-compliance with Internal Ombudsman norms.
According to the RBI, the penalty followed a statutory inspection conducted as of March 31, 2024, which revealed that the company failed to establish an automated system to escalate customer complaints—either partially or wholly rejected by its grievance mechanism—to the Internal Ombudsman.
The central bank clarified that the penalty was based on regulatory deficiencies and did not impact the validity of any transaction or agreement between Muthoot FinCorp and its customers.
