The bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india (RBI) has taken significant action against IIFL Finance, barring the company from distributing gold loans due to "material supervisory concerns." This move comes under the bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india Act, 1934, and prohibits IIFL Finance from sanctioning any new gold loans, effective immediately. However, the company will continue to service its existing gold loan portfolio.
The RBI's action follows a thorough investigation into IIFL Finance's financial position until march 31, 2023. The probe revealed irregularities in the gold loan distribution process, including inadequate reporting on the purity and weight of gold during loan distribution and auction. Violations of the loan-to-value ratio were also observed. The central bank noted that IIFL Finance was exceeding cash usage norms during loan distribution and recovery, while transparency regarding customer charges was lacking.

The RBI emphasized that these practices were detrimental to the interests of IIFL Finance's customers. Despite collaborative efforts between RBI and company officials to rectify these issues in recent months, the desired results were not achieved, leading to the necessity of this stringent measure. The RBI has suggested that if satisfactory outcomes emerge following a special audit, relief may be granted to IIFL Finance.

This regulatory action against IIFL Finance follows another major move by the RBI within the past month, where it took strict measures against paytm Payments Bank. The central bank's intervention in these cases underscores its commitment to maintaining the integrity and transparency of financial institutions for the protection of customer interests.
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Sindujaa D N

04/03/2024 08:52 PM