Muthoot Insurance Brokers Pvt., a wholly owned subsidiary of Muthoot Finance Ltd., has suspended its Chief Executive Officer, Thomas P Rajan, following revelations of fraudulent activity within the company. The case, which also implicates Ranjit Kumar Ramachandran, the former Chief General Manager of Business Performance (South) at Muthoot Finance, involves the misappropriation of employee reward incentives.

According to a stock exchange filing submitted late on March 12, Rajan and Ramachandran were found to have diverted gift cards meant as performance rewards for employees who contributed to generating business. The fraudulent activity, spanning from April 2023 to November 2024, resulted in a misappropriation amounting to Rs 11.92 crore.

While the financial irregularity did not cause an "accounting loss" to Muthoot Insurance Brokers—since the funds in question were earmarked for employee rewards—the company reported a notional revenue loss of Rs 31.28 crore. This figure, as stated in the company’s filing, represents the potential business growth that could have been achieved had the rewards been properly distributed among employees.

Following the discovery of the fraud, Muthoot Insurance Brokers has taken legal action by filing a First Information Report (FIR) against the accused individuals. The company has assured stakeholders that appropriate measures are being implemented to prevent such incidents in the future and to safeguard the integrity of its incentive programs.

The scandal has raised concerns about internal governance and oversight mechanisms within Muthoot Finance’s subsidiaries. Industry experts suggest that robust internal audits and stricter control measures could help mitigate similar risks in the future. Meanwhile, Muthoot Insurance Brokers is expected to undergo an internal review to identify potential lapses and enhance transparency in its reward distribution system.

As the investigation progresses, further developments may shed light on the full extent of the misappropriation and the accountability measures to be taken against the suspended CEO and the former executive. The incident underscores the importance of stringent financial controls in corporate structures, particularly in high-stakes financial institutions where trust and compliance are paramount.