RBI appointed auditor completes special audit of IIFL Finance

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

“We would like to inform you that the special audit conducted by the Reserve Bank of India (RBI) has been completed,” IIFL Finance told the stock exchange. The special audit led by RBI began 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 a matter between the regulator and the company 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 banned the finance company from allocating, securitizing and selling its gold loans.

The regulator had observed anomalies in testing and certifying the purity and net weight of the gold at the time of sanctioning loans and at the time of auction in case of default.

The regulator also found breaches in the loan-to-value ratio, significant disbursements and collections of loan amounts in cash well above the legal limit, failure to adhere to the standard auction process and a lack of transparency in costs to customers.

First print: June 6, 2024 | 9:16 pm IST