RBI took action against IIFL Finance and stopped it from giving gold loan
Utkarsh ClassesLast Updated
05-03-2024
Banking and Finance
4 min read
The Reserve Bank of India (RBI) barred IIFL Finance from distributing gold loans with immediate effect on March 4, 2024. The regulator has taken this strict step after serious flaws were found in the testing and verification of gold purity.
This instruction of the Reserve Bank of India (RBI) is related only to the gold loan business of IIFL Finance. IIFL Finance, a leading financial services provider, offers a wide range of loans and mortgages.
Why did the RBI take this step?
According to the RBI, this step has been taken after some concerns came to light in lending against gold during regulatory supervision. However, IIFL Finance can continue to maintain its existing gold loan portfolio through the collection and recovery process of existing loans.
RBI gave instructions to IIFL:
The RBI has directed IIFL to stop sanctioning or disbursing gold loans or securitization or sale of any of its gold loans with immediate effect. RBI said the company was inspected with reference to the financial position of IIFL as on March 31, 2023.
Serious deficiencies in testing purity & certification of gold in IIFL:
According to the RBI, 'Some significant concerns were observed in the gold loan business of the company. These include serious lapses in testing and certification of purity and net weight of gold at the time of loan sanction and at the time of default auction.
Apart from this, irregularities in distribution and collection of loan amounts in cash in excess of the statutory limit and non-compliance with the standard auction process were also found.
IIFL did not make reforms:
According to the RBI, he had been talking to the company's senior management and auditors over these lapses over the past few months. But no 'meaningful corrective action' has been taken on this.
In this situation, it has become necessary to impose trade restrictions with immediate effect in the overall interest of the customers. In this context, the central bank said that apart from being regulatory violations, these activities also affect the interests of customers.
These restrictions will be reviewed after a satisfactory solution:
These restrictions will be reviewed upon completion of a special audit by RBI and the company's satisfactory satisfaction of the special audit findings and RBI inspection findings.
About IIFL Finance Limited:
IIFL Finance is one of the leading companies in the financial services sector.
IIFL along with its subsidiaries provides a variety of loan services. in which mainly
IIFL Home Finance
IIFL Samast Finance Limited
IIFL Open Fintech.
IIFL has over 2,600 branches in over 500 cities.
Venkatesh N is the Founder and Managing Director of IIFL Samasta Finance Limited.
FAQ
Answer: IIFL Finance
Answer: IIFL Finance is one of the leading companies in the financial services sector.
Submit your details to access
Free Questions Booklet
Thank You! Your PDF Resource is Ready for Download
Install the
Utkarsh AppTo Access Your
5 Model Test Papers & Exclusive Offers
Install Now
Get Unlimited Download
To download limitless free study materials, provide your mobile number.
Submit Your Details to Get 25 Coins for FREE!
You're All Set!
25 Coins have been credited to your wallet. Install the UTKARSH app now to redeem and start learning!
DOWNLOAD OUR APP
Utkarsh Classes: Prepare for State & Central Govt Exams
With the trust and confidence of our students, the Utkarsh Mobile App has become a leading educational app on the Google Play Store. We are committed to maintaining this legacy by continually updating the app with unique features to better serve our aspirants.