Muthoot Capital Services told to refund additional processing fee

Company posts Rs18.95 cr profit for Q3

KOCHI: RBI has directed Muthoot Capital Services Ltd (MCSL) to refund the additional processing fee collected on account of a life coverage scheme offered by the company to its borrowers last year.

Meanwhile, the company has reported net profit of Rs18.95 crore for the three month period (Q3) ending December 31, 2019 against Rs24.54 crore the company posted for the same period last year.

The nine-month net profit was Rs46.58 crore, down by about 27 per cent compared with Rs63.47 crore the company turned in for the same period last year.

The MCSL scheme that came under the RBI radar was intended to provide life coverage for the company’s borrowers through an umbrella insurance policy held in the company’s name.

Following an inspection carried out into the company’s book for the year ending March 31, 2019, RBI asked Muthoot Capital Services to refund the amounts collected in excess of the actual premiums paid by the company to buy the life coverage.

However, the company has stated that it is in the process of filing a representation before RBI providing justification for collection of these charges and seeking withdrawal of the directive.

Muthoot Capital Services has also clarified that no liability has been anticipated by the company on this account. MCSL is promoted by the Muthoot Pappachan Group, and is a non-banking finance company (NBFC) registered with the Reserve Bank of India (RBI) and listed on both BSE and NSE.

MCSL’s portfolio includes retail finance products such as two -wheeler loans, used car loans and fixed deposits.

While the company generated an interest income of Rs150.55 crore for the three-month period under review, the comparable number for the same period last year was less by 13 per cent, at Rs131.01 crore.

However, the finance costs and other expenses during the current three month period were relatively higher compared with the same period last year resulting in a lower net profit for the three-month period ending March 31, 2019.

 

 

 

 

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