Investigative journalism platform Cobrapost has alleged that Cholamandalam Investment and Finance Company Ltd (CIFCL), a leading non-banking financial company (NBFC) of the Murugappa Group, was involved in related-party and intra-group transactions amounting to nearly ₹10,262 crore.
In its recent investigation report, Cobrapost claimed that several transactions involved related parties, family members, and key management personnel, with portions of the funds allegedly routed through layered transactions that may warrant regulatory scrutiny.
The report further alleged that CIFCL made cash deposits of around ₹25,089 crore across 14 banks between FY20 and FY25, and earned insurance commissions of ₹942 crore during FY25.
Cobrapost also raised concerns over potential bundling of insurance products with vehicle loans, a practice prohibited under IRDAI regulations, given that a significant portion of CIFCL’s business comes from vehicle and home financing.
Key Allegations Highlighted by Cobrapost
- Fund Diversion Claims
Cobrapost alleged that Cholamandalam MS General Insurance Company Ltd (CMGICL) diverted approximately ₹3,040 crore to nine Murugappa Group entities, with transactions reportedly classified under heads such as insurance commission, professional fees, and work contracts. - Professional Fees to Group Entities
The report claimed that transactions worth nearly ₹1,578 crore were recorded with several Murugappa Group companies, including ₹1,036 crore paid as professional fees to nine related entities. - Disclosure and Governance Concerns
According to Cobrapost, the scale and concentration of such transactions raise concerns regarding their potential impact on minority shareholders and joint venture partners. - Unreported Transactions
While CMGICL reportedly disclosed related-party transactions of ₹116 crore, Cobrapost alleged that additional transactions identified during the investigation were not disclosed in regulatory filings. - Work Contract Payments
The investigation claimed that CIFCL filings show over ₹1,654 crore paid as work contracts to multiple Murugappa Group entities, which were allegedly not reflected as related-party transactions.
Cholamandalam’s Response
In a filing to stock exchanges, Cholamandalam Investment and Finance Company rejected all allegations, describing them as “malicious, baseless, and motivated”, and urged investors to avoid speculation while the claims are examined.
Company Clarifications
- Asset Quality & Liquidity:
CIFCL stated that its asset quality and liquidity position remain strong, as reflected in its audited financial statements for the quarter ended September FY26. - Cash Deposits Explanation:
The company said it serves over 50 lakh customers across 1,700 branches, primarily small transport operators and self-employed individuals who transact in cash. Cash collections, including EMIs, are deposited into banks and are subject to internal and external audits. - Related-Party Transactions:
CIFCL clarified that all related-party transactions are fully disclosed and conducted in compliance with applicable legal and accounting standards. Payments to group entities were stated to be for manpower, IT services, strategic support, and temporary working capital. - Individuals Benefiting Allegations:
The company denied claims of individuals benefiting improperly, stating that all payments to board members, key managerial personnel (KMPs), and senior management were lawful and duly disclosed. - Payments to Rating Agencies:
CIFCL noted that higher borrowing levels in certain years necessitated additional credit ratings, resulting in higher rating-related expenses. - CSR Contributions:
The company clarified that CSR payments were made through work contracts to implementing agencies, in line with statutory requirements.
Disclaimer
This article is based on publicly available information and company disclosures. The allegations mentioned are as reported by Cobrapost and have been denied by the company. This content is for informational purposes only and does not constitute investment, legal, or financial advice. Readers are advised to rely on official filings and consult qualified professionals before making any decisions.
