Enforcement Directorate Questions Muthoot Group MD in Investor Fraud Case

The Enforcement Directorate (ED) has questioned George Alexander Muthoot, Managing Director of the Muthoot Group, in connection with a money-laundering probe reportedly linked to an alleged investor fraud. The case stems from multiple police complaints in Kerala, where investors have accused certain Muthoot executives of mis-selling investment products under “false pretences”.

Probe Under PMLA Lens

According to sources, the interrogation was conducted by the ED’s Kochi zonal office under the Prevention of Money Laundering Act (PMLA). The case reportedly originates from FIRs registered by the Kerala Police against a few employees of Muthoot Finance. Investigators are examining whether funds collected from investors were illegally diverted and if any part of the proceeds was laundered.

Allegations of Mis-Selling

The complaints allege that several branch managers offered investors returns of 8–12 percent on fixed deposits and non-convertible debentures (NCDs), falsely assuring them that the instruments were backed by the Muthoot Group. However, the money was allegedly routed to Srei Equipment Finance Limited, which had no corporate relationship with Muthoot.

Around 49 retail investors, many of them senior citizens, claim they invested a total of Rs 10.2 crore between 2017 and 2018, expecting the safety of a Muthoot-backed product. When the NCDs matured, repayments reportedly never came through. Some investors later discovered that their funds were tied to Srei, not Muthoot, after the company defaulted.

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Company Response and Next Steps

In its clarification, Muthoot Finance said it had no financial linkage with Srei Equipment Finance. It stated that its subsidiary, Muthoot Securities Ltd, merely acted as a broker for Srei’s NCD issue and used the parent company’s branch network for administrative convenience.

The ED has recorded George Alexander Muthoot’s statement and is reviewing documents to trace the movement of investor funds. The agency is expected to coordinate with state police to establish whether the alleged diversion constitutes money laundering.

For now, the focus remains on determining who authorised the sales pitch that convinced dozens of investors to part with their life savings — and whether the practice was systemic or limited to rogue employees.