Tuesday, April 16, 2024

RBI slams IIFL after Paytm, ban on gold loans, shares plummet | leader

Leaders Online: After banning fintech giant Paytm Bank, the Reserve Bank of India (RB) has slapped yet another company. RBI has asked IIFL Finance to immediately sanction gold loans or stop disbursement of loans. The RBI said the investigation found serious deviations in checking and certifying purity and net weight of gold as well as violation of loan to value ratio (LTV) during loan sanctioning and auctioning.

Meanwhile, shares of IIFL Finance fell as much as 20 percent to Rs 477 in early trade on the NSE on Tuesday after the RBI action. (IIFL Finance Share Price)

“The RBI, in exercise of its powers under Section 45 L(1)(b) of the Reserve Bank of India Act, 1934, has directed IIFL Finance Limited to stop granting or lending/securing/selling gold loans with immediate effect.” This was stated in a press release issued by RBI.

The decision was taken after an examination by the RBI of the company's financial position as on March 31, 2023. In which the RBI found anomalies in certain areas of the company's operations. The RBI said that the above violations significantly and adversely affect the interests of consumers.

Meanwhile, the RBI has allowed IIFL to continue servicing its existing gold loan portfolio through the usual collection and recovery process.

Disclosure by the Company

Following the RBI's action, the company issued a statement saying, “We remain committed to complying with the RBI's findings in our gold loan portfolio at the earliest and continue our efforts to provide gold loan services in the interest of customers”.

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