The Reserve Bank of India (RBI) has lifted the ban on IIFL Finance’s gold loan business. These restrictions were imposed on March 4, 2024, under which the company was prohibited from approving and distributing any of its gold loans. IIFL Finance said in a regulatory notice that the Reserve Bank of India, by notification dated September 19, 2024, has lifted the restrictions imposed on the gold loan business of IIFL Finance Limited.
The Reserve Bank’s decision is effective immediately and allows the company to resume sanctioning, disbursing, securitising and selling gold loans in compliance with all relevant laws and regulations. IIFL Finance said the company is committed to maintaining the highest standards of compliance and will continue to ensure that the corrective measures taken are maintained.
For this reason IIFL was banned.
The RBI had said in its statement that the financial position of IIFL Finance was reviewed. As per the financial position of the company as on March 31, 2023, some concerns were noted regarding the level of monitoring of its gold loan portfolio. In these, irregularities were noted related to approval of gold loan, time taken for it and in case of default, verification of purity and weight of gold and its verification etc. at the time of gold auction. Following this, the Central Bank decided to stop this process of the company.
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RBI says that apart from regulatory violations, these activities affect the interests of clients. That is why this ban has been imposed on IIFL Finance. Now the RBI will audit almost all the company’s documents in this regard, only after that this ban will be reviewed.
