Case Brief
What Happened
The Reserve Bank of India issued a cease-and-desist direction under Section 45L(1)(b) of the RBI Act, 1934 against IIFL Finance Ltd. The company has been barred with immediate effect from sanctioning or disbursing gold loans, and from assigning, securitising, or selling any of its gold loans. RBI said the action followed an inspection and revealed serious issues in the gold loan portfolio, including deviations in assaying and certifying the purity and net weight of gold, breaches of LTV norms, excessive cash disbursals and collections beyond statutory limits, non-adherence to the standard auction process, and lack of transparency in charges. RBI noted that customer interests were adversely affected and that prior engagement with senior management and statutory auditors had not resulted in meaningful corrective action. The restriction will be reviewed after a special audit and rectification of the findings to RBI’s satisfaction.