ITANAGAR, 8 Mar: The Reserve Bank of India (RBI) on Monday directed IIFL Finance Ltd, a company, to “cease and desist, with immediate effect, from sanctioning or disbursing gold loans or assigning/securitising/selling any of its gold loans.”
The company can, however, continue to service its existing gold loan portfolio through usual collection and recovery processes, said an RBI press release.
“An inspection of the company was carried out by the Reserve Bank with reference to its financial position as on 31 March, 2023. During the inspection, certain material supervisory concerns were observed in the gold loan portfolio of the company, including serious deviations in assaying and certifying purity and net weight of the gold at the time of sanction of loans; non-adherence to the standard auction process; and lack of transparency in charges being levied to customer accounts, etc,” the release said, adding that “these practices, apart from being regulatory violations, also significantly and adversely impact the interest of the customers.”
The release further said that, over the last few months, the RBI has been engaging with the senior management and the statutory auditors of the company on these deficiencies “but no meaningful corrective action has been evidenced so far.”
“These supervisory restrictions will be reviewed upon completion of a special audit to be instituted by the RBI and after rectification by the company of the special audit findings and the findings of RBI inspection, to the satisfaction of RBI,” the release said.
