RBI-appointed auditor completes the special audit of IIFL Finance

Finance firm facing curb on gold loan business

The Reserve Bank of India (RBI)-appointed auditor has concluded the special audit of IIFL Finance Ltd, which is facing curbs on its gold loan business due to breaches of prudential lending norms.

“We wish to inform you that the special audit directed by the Reserve Bank of India (RBI) has been concluded,” IIFL Finance informed the stock exchange. The special audit directed by RBI commenced on April 23, 2024.

The company officials said the non-banking financial company (NBFC) will not be in a position to comment on the audit process as this is an issue between the regulator and the firm that conducted the audit.

On March 4, 2024, the Reserve Bank of India had asked IIFL Finance to stop sanctioning or disbursing gold loans. It also barred the finance company from assigning, securitising, and selling any of its gold loans.

The regulator had observed deviations in assaying and certifying the purity and net weight of the gold at the time of sanctioning loans and at the time of auction upon default.

The regulator also found breaches in the loan-to-value ratio, significant disbursements and collections of loan amounts in cash far in excess of the statutory limit, non-adherence to the standard auction process, and lack of transparency in charges on customers.