Taking major action against non-banking finance company IIFL Finance, the Reserve Bank of India (RBI) has banned the issuance of new gold loans.
New Delhi. After Paytm Payments Bank, now the Reserve Bank of India (RBI) has taken major action against another company. Actually, RBI has taken major action against non-banking finance company IIFL Finance. The central bank has banned the issuance of new gold loans to IIFL. However, RBI said in a statement that IIFL Finance can continue its existing gold business.
The central bank has taken this decision in view of some supervisory concerns in the gold loan portfolio of the company. RBI has issued a statement saying that it has taken this action while exercising its powers under Section 45L (1)(B) of the Reserve Bank of India Act 1934.
Action against IIFL Finance Limited under Section 45L(1)(b) of the Reserve Bank of India Act, 1934https://t.co/8B9sNWKicG
— ReserveBankOfIndia (@RBI) March 4, 2024
Errors in loan to value ratio
According to RBI, the company was inspected with reference to the financial position of IIFL as of March 31, 2023. Irregularities have been found in the Loan to Value Ratio (LTV) of IIFL Finance. The central bank said that apart from being regulatory violations, these activities also affect the interests of customers. The central bank says that there will be a special audit of the company’s operations and after that the restrictions will be reconsidered.
RBI has taken major action against Paytm Payments Bank
It is noteworthy that while issuing an order on January 29, RBI had imposed several restrictions on Paytm Payments Bank. RBI had ordered Paytm Payments Bank to stop taking new deposits and credit transactions after February 29. However, later RBI gave relief to Paytm Payments Bank till March 15, 2024.
