RBI asks IIFL Finance to stop sanctioning gold loans

RBI has asked IIFL Finance to stop the sanctioning and disbursement of gold loans, citing “material supervisory concerns” observed in the non-bank financier’s gold loan portfolio.

The central bank said the lapses, which comprised regulatory violations, adversely impact the interest of the customers. The RBI had carried out an inspection of the company regarding its financial position as on 31 March 2023.

During the inspection, RBI found “serious deviations” in the assaying and certification of gold used as collateral for loans and during auctions upon default.

In a statement, the central bank noted violations in the maximum allowed loan-to-value ratio and found that IIFL Finance exceeded permitted cash collections, failed to adhere to the standard auction process, and lacked transparency in the fees charged by the company.