Give top priority to regulatory concerns, redressal: FIDC to member firms

Taking note of the spate of regulatory actions against large finance firms, the Finance Industry Development Council (FIDC), today, asked member firms to give the highest priority to concerns and observations from regulators. They should take suitable action within the prescribed time-frame.

“It is equally important to keep the regulator informed on the remedial measures being taken to address their concerns, as and when required,” FIDC, an industry lobby group, said in a letter to member firms.

The Reserve Bank of India (RBI) prohibited IIFL Finance from sanctioning and disbursing fresh gold loans following supervisory concerns. The regulator also directed JM Financial Products to cease and desist from doing any form of financing against shares and debentures due to certain deficiencies in sanctioning. This included a curb on sanction and disbursal of loans against Initial Public Offerings (IPOs) of shares as well as against subscription to debentures.

FIDC said adherence to all applicable laws and regulations at all times is a sine qua non. Specifically, norms relating to Know Your Customer (KYC) and Anti Money Laundering (AML) should be followed, since any loophole in internal processes could compromise India’s internal security and economic interests.

There should not be a shortcut or an attempt to circumvent these most important norms in any manner.

There have been regulatory actions over the past few months by the RBI and other regulators against a few large entities having substantial business to emphasise the importance of strict compliance and governance.

“Of course, the clear message is that if business has to be done, it has to be done in accordance with acceptable standards and within the laws of the land,” FIDC said.