Reserve Bank of India has taken major action against NBFC company IIFL Finance. The company has been barred from disbursing gold loans with immediate effect. The action against the company is related to non-compliance of gold loan rules. However, the company will be able to continue servicing existing loans.
What rules were ignored?
The RBI had seen some oversight concerns in the distribution of the company’s gold loan. There were concerns like purity and weight of gold at the time of loan sanction and default during auction. Also, the company was not following standard norms for loan-to-value ratio, customer charges, collections, disbursements, etc.
RBI inspected.
IIFL Finance was inspected by RBI on March 31, 2023 based on its financial condition, after which all these irregularities came to light. The regulator has since taken action against the company.
The company did not take any action
The letter issued by the RBI said that ignoring the rules by the company is not in the interest of the consumers. For this, RBI was in discussion with senior management. But no proper steps have been taken by them due to which the company has been banned from doing business.
Let us tell you, earlier RBI took action against Paytm Payment Bank for non-compliance of rules and ordered the company to stop all services from March 15, 2024.
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