RBI bars IIFL Fin from sanctioning gold loans for supervisory concerns

RBI Halts IIFL Finance Gold Loan Operations Over Regulatory Concerns

Team Finance Saathi

04/Mar/2024

Discover why the Reserve Bank of India has ordered IIFL Finance to cease its gold loan activities immediately due to regulatory violations impacting customer interests.

In a significant move, the Reserve Bank of India (RBI) has directed IIFL Finance to halt all sanctioning and disbursing of gold loans with immediate effect. This action comes in response to material supervisory concerns identified in IIFL Finance's gold loan portfolio, raising alarm bells over customer interests.

Following an inspection conducted by the RBI concerning IIFL Finance's financial position as of March 31, 2023, several critical issues were unearthed. These concerns included serious deviations in assaying and certifying the purity and net weight of gold during loan sanctioning and auction processes upon default. Additionally, breaches in Loan-to-Value ratios, excessive cash transactions beyond statutory limits, and non-compliance with standard auction procedures were flagged by the regulator.

Moreover, the RBI noted a lack of transparency in the levying of charges to customer accounts, further exacerbating the regulatory violations. While IIFL Finance is permitted to continue servicing its existing gold loan portfolio through regular collection and recovery channels, the RBI's directive underscores the severity of the identified deficiencies.

Despite engagements with senior management and statutory auditors, the RBI expressed dissatisfaction with the lack of meaningful corrective action taken by IIFL Finance. Consequently, the imposition of business restrictions aims to safeguard customer interests and ensure regulatory compliance.

These supervisory restrictions will remain in place pending the completion of a special audit initiated by the RBI. The resolution of audit findings, along with rectification measures addressing RBI inspection outcomes, will determine the eventual lifting of business restrictions, as confirmed by the central bank.

The RBI's decisive action underscores its commitment to maintaining the integrity of financial institutions and safeguarding customer interests in the Indian banking sector.

Disclaimer

The information provided on this website is for educational and informational purposes only and should not be considered as financial advice, investment advice, or trading recommendations.

Trading in stocks, forex, commodities, cryptocurrencies, or any other financial instruments involves high risk and may not be suitable for all investors. Prices can fluctuate rapidly, and there is a possibility of losing part or all of your invested capital.

We do not guarantee any profits, returns, or outcomes from the use of our website, services, or tools. Past performance is not indicative of future results.

You are solely responsible for your investment and trading decisions. Before making any financial commitment, it is strongly recommended to consult with a qualified financial advisor or do your own research.

By accessing or using this website, you acknowledge that you have read, understood, and agree to this disclaimer. The website owners, partners, or affiliates shall not be held liable for any direct or indirect loss or damage arising from the use of information, tools, or services provided here.

Services

RBI Halts IIFL Finance Gold Loan Operations Over Regulatory Concerns

Related News

Disclaimer