RBI has written a letter to NBFC informing about this and has said that as per the rules, cash loan of more than Rs 20 thousand cannot be distributed to any customer.
The Reserve Bank of India (RBI) has issued strict instructions for non-banking financial companies (NBFCs), according to which no NBFC can give cash loans of more than Rs 20,000 to customers. Under Section 269SS of the Income Tax Act, 1961, no person is allowed to get a cash amount of more than Rs 20 thousand as loan.
Reuters report says that RBI now wants to tighten this rule, so that NBFC companies do not have to face risk and the rules are not ignored. RBI has issued these instructions at a time when IIFL Finance, an NBFC company, has been accused of breaking several rules. It was reported in the report that some companies had given and collected loans in cash more than the limit prescribed by law.
Loan amount more than Rs 20 thousand should not be given in cash.
RBI has written a letter to NBFC and said that as per the rules, no cash loan of more than Rs 20 thousand can be given to any customer. In such a situation, any NBFC should not give loan amount more than Rs 20,000 in cash.
Why did RBI give such instructions?
During the last few days, Reserve Bank of India has taken action against many NBCC companies. These companies had ignored the RBI rules. There was also a violation of the rule of giving more cash loans. In such a situation, RBI has given such instructions to NBFCs by reminding them of the rules, so that negligence and ignoring the rules can be stopped.
Why was action taken against IIFL Finance?
It is noteworthy that the Central Bank had directed IIFL Finance to immediately stop its gold loan operations for new customers due to major lapses in loan management. IIFL Finance’s gold loan operations contribute significantly to its business, accounting for one-third of its business. This finance company had ignored rules like inadequate checking on purity and weight of gold, giving excessive cash loans, deviation from standard auction procedures and lack of transparency in customer account charges.
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