Muthoot Finance Subsidiary Accuses Former Executives of Rs 11.92 Crore Misappropriation

Muthoot Insurance Brokers, a wholly owned subsidiary of Muthoot Finance, has filed an FIR against its suspended CEO, Thomas P Rajan, and former chief general manager-business performance (South), Ranjit Kumar Ramachandran.

The company has accused the two of misappropriating employee rewards worth ₹11.92 crore between April 2023 and November 2024.

In a filing with the stock exchange on March 12, Muthoot Finance disclosed that the misappropriation involved gift cards received from insurance companies.

These gift cards were meant to be distributed as performance incentives to employees. However, the rewards were allegedly diverted for personal gain by the accused executives.

“Misappropriation of rewards in the form of gift cards received from insurance companies meant for distribution to employees from April 2023 to November 2024,” the company said in its exchange filing.

Financial and Business Impact

While the fraudulent activity has not directly impacted Muthoot Finance’s financial statements, the company highlighted that the notional loss of revenue stands at ₹31.28 crore.

This figure represents the estimated additional business that could have been generated had the rewards been properly distributed to employees.

“No financial impact on Muthoot Finance… However, the notional loss of revenue is ₹31.28 crore based on the estimated additional business generated had the misappropriated rewards been distributed to employees,” the company stated in the filing.

How the Fraud Was Uncovered

The misappropriation was discovered following discrepancies in the issuance of gift coupons between November 2023 and 2024.

According to reports from Kerala Kaumudi, the fraud involved high-value gift coupons, each worth approximately ₹10 lakh. These were meant to reward top-performing employees but were instead diverted.

The accused allegedly forged documents and conducted minimal transactions with shopkeepers to withdraw cash, pocketing the funds for personal use.

An internal investigation at Muthoot Insurance Brokers confirmed the irregularities, prompting the company to file a formal complaint with the Ernakulam South Police.

Legal Action and Investigation

Following the internal probe, Muthoot Insurance Brokers filed a First Information Report (FIR) against the accused. The case is currently under police investigation, with authorities working to determine further legal action.

Both Rajan and Ramachandran have since approached the court seeking anticipatory bail. The company has stated that it will cooperate fully with the authorities during the investigation.

Strong Business Performance Despite Fraud

Despite the reported fraud, Muthoot Finance has maintained strong business performance.

The company posted a 21% increase in consolidated profit after tax (PAT) in the third quarter of the financial year 2024-25. PAT stood at ₹1,392 crore in Q3 FY25, up from ₹1,145 crore in Q3 FY24.

Interest income also showed significant growth, rising to ₹5,067.3 crore in Q3 FY25 from ₹3,683.1 crore in the same quarter the previous year.

RBI Approves Expansion of Branch Network

In addition to reporting strong financial results, Muthoot Finance recently secured approval from the Reserve Bank of India (RBI) to expand its branch network. The central bank has granted permission for the company to open 115 new branches.

“It is advised that you have been granted permission for opening of 115 new branches as requested and the company is also advised to ensure suitable arrangements for security and for the storage of gold jewellery,” the RBI stated.

The company has been instructed to make necessary security arrangements and ensure proper storage facilities for gold jewellery, including the installation of safe deposit vaults.

Reaction and Next Steps

The fraud revelation has sparked attention in the financial sector. While the incident underscores the importance of internal controls, Muthoot Finance’s ability to maintain strong financial performance reflects the resilience of its business model.

The company has reassured stakeholders that it is taking all necessary steps to strengthen internal controls and prevent similar incidents in the future.

The ongoing police investigation will determine the extent of the misappropriation and any additional legal consequences for the accused executives.