RBI takes strict actions against IIFL Finance Limited to cease the operations immediately

The Reserve Bank of India has taken strict actions under its power of Section 45L[1][b] of the RBI Act, 1934, directing finance company IIFL Finance Limited to cease, with immediate effect, from sanctioning or disbursing gold loans or assigning /securitizing/ selling any of its gold loans. The company can, however, continue to service its existing gold loan portfolio through the usual collection and recovery processes.

An inspection was carried out, certifying 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 and at the time of auction upon default, breaches in Loan to Value ratio, the significant disbursal and collection of the loan amount in cash far over the statutory limit, non-adherence to the standard auction process and lack of transparency in charges being levied to customer accounts, etc.

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The 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 inspection findings by the Central Bank authority.

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